The Suite Life: Unlocking the Potential of Your Rental Space

In 2015, the CMHC announced they were changing the rules regarding “mortgage helpers”, allowing for 100% of rental income from legal secondary suites to be included when qualifying for a mortgage. Buyers could now potentially purchase a property worth more than they could afford because the additional rental income would be considered when determining financing requirements. 

So what is a mortgage helper? 

In simple terms, a mortgage helper is an additional suite in your home that you can rent out to generate extra income, which helps offset your mortgage payments. 

For first-time homebuyers, navigating the property market can be challenging due to rising housing costs in certain jurisdictions in Canada. Having alternative financial strategies in place can help manage the real estate market more effectively. 

(Emerald II at 1221 Lone Pine Dr.) 

Let’s look at a concrete example using an actual property from the exclusive community of Lone Pine Estates in the city side of Black Mountain. We’ve run the numbers using Carrington Homes’ beautiful Emerald II model, located at 1221 Lone Pine Drive which is currently priced at $1,439,900.  

Assumptions: 

• 20% down payment of $287,980 

• Mortgage amount of $1,151,920. 

We looked at two different scenarios – one using a 25-year amortization, and the second, a 30-year amortization. Both scenarios illustrate the differences in required annual income and payments per month between the Emerald II with a suite and the Emerald II without a suite. 

Example using 25-year amortization* 

A homebuyer with a suite would pay roughly 32% less in monthly mortgage payments than if they didn’t have a suite; and would need $26k less in required income. 

Example using 30-year amortization* 

In this scenario, over 35% of monthly mortgage payments are saved with a rental suite and requiring $27K less in qualifying income. 

The differences are substantial and the financial benefits a mortgage helper can offer are significant.  

Important considerations 

Keep in mind that a legal mortgage helper must comply with local bylaws and zoning requirements. It needs to be self-contained within your property and should have its own living areas including kitchen, bathroom and separate entrance. Proper sound-proofing and ventilation are also important zoning requirements for secondary rental suites. 

If you’re ready to become a landlord, make sure to familiarize yourself with the Residential Tenancy Act. Additionally, review your insurance policy and inform your provider about your secondary suite to ensure your coverage remains valid. 

While managing both tenants and property may seem overwhelming, the financial rewards can be substantial. 

If you’re interested in learning more or need help navigating the complexities of the mortgage process, reach out to Gord or Stephanie at BlueTree Mortgages West. 

*All calculations done at 5.04%, and qualified at 7.04% per government regulations.