New mortgage insurance rule changes in Canada now allow homeowners to refinance their mortgage to build secondary suites like basement apartments or carriage houses. As of October 2024, homeowners can refinance up to 90% of their property’s post-renovation value in order to add new dwelling units to their homes. This update is a game-changer for homeowners in Kelowna, as it can increase property value while helping address the region's growing housing needs.

Secondary suites are a popular option in Kelowna, where real estate prices have risen, and affordable rental units are in high demand. These suites offer homeowners an opportunity to generate long-term rental income by creating additional living spaces for tenants or family members. 

Additionally, homes with legal secondary suites often appeal to buyers, increasing the property’s resale value. For those considering selling, this new refinancing rule allows for improvements that could make their home more attractive on the market, command a higher price, and open up their potential buyer pool. And for buyers currently watching the market, this opens up significant inventory of homes that do not yet have secondary suites, but could easily have them added after purchase if they can manage the full payments in the interim until refinancing. Additionally for buyers, this allows for them to be able to do renovations to add suites even after using their currently available funds for their downpayment and funds to close.  

To qualify for this refinancing option, homeowners must meet specific lending criteria, and the construction of a secondary suite must satisfy the requirements for a legal suite' with permits and meeting zoning and building codes. Additionally, since these suites must be used as long-term rentals, they won't be an option for homeowners hoping to use the space for short-term vacation rentals. However, there are some potential drawbacks to consider, drawing concerns that this encourages borrowers to become even more indebted while doing the job of the government to increase housing supply. When considering if this program is for you, take a look at the future value of your property, what the added potential income may look like, and if this will offset the increase payments on your loan or not. 

If you’re looking to buy or sell in Kelowna, understanding these changes could unlock new potential in your real estate plans. Adding a secondary suite can increase property value and help meet the growing demand for rental units, but it's important to weigh both the benefits and the limitations.