Simply put, a mortgage helper is a separate suite in your home that you can rent out for extra income in order to subsidize your mortgage. These self-contained suites can also be a great way to secure extra space for your family before you actually need it, by providing options in the future with regards to aging parents or expanding your living space when your kids start to grow up.
HOW DO MORTGAGE HELPERS AFFECT MY MORTGAGE?
In 2015, the CMHC announced that they were changing the rules with regards to a mortgage helper. 100% of rental income from a legal secondary suite could now be included when qualifying for a mortgage. As a result, buyers could potentially purchase a property worth more because the extra rental income will be taken into account when it comes to financing requirements. Now, it may be possible for many buyers to make the leap to a larger or detached home.
In order to use 100% of a potential rental income towards your financing, you will need to satisfy the following criteria:
- Part of the property must be owner-occupied
- The property being insured can have only two units (i.e., a duplex or a single home with a legal secondary suite).
- Rental income cannot be used if the suite is “illegal or unauthorized”
- The suite must be self-contained with its own entrance.
A legal suite is one that complies with City of Nanaimo’s zoning requirements for secondary suites (more information here) including ceiling heights, fire protection, exits, parking etc. You shouldn’t run into any issues with financing or the City if you have a legal suite.
An authorized suite is one that previously complied with City of Nanaimo’s requirements, but may not any longer . A City Building Inspector would have performed necessary inspections and confirm BC Building Code standards and/or that life-safety issues have been addressed, including fire safety factors such as fire detection, fire spread and safe exiting.
An illegal suite is one that has never received approval from the City, has not been constructed under a building permit, and does not comply with current zoning and code requirements. If this is discovered by the City, they can make you renovate the suite until it does comply with current zoning codes or require you to stop renting the suite.
THE BIGGEST POINT TO KNOW ABOUT OWNING A MORTGAGE HELPER?
You’re now a landlord, and will need to brush up on the Residential Tenancy Act. When it comes to managing the tenant and the space it can be a big undertaking, but often a financially rewarding one.
If you’re interested in chatting on more information about Mortgage Helpers, in-law suites and basement suites give us a call, we are here to help.