How Mortgage Changes Impact Fernie Real Estate

In this episode of The Property Mindset Podcast, host Phil Gadd is joined by mortgage expert Stephanie Roughhead to break down the latest mortgage changes in Canada and their impact on the Fernie real estate market. With updates aimed at making homeownership more accessible, these changes bring new opportunities for buyers, sellers, and investors. Stephanie covers three major announcements and what they mean for anyone looking to enter or stay ahead in the market. If you're navigating the current real estate landscape, this episode is a must-listen for valuable insights and actionable advice.

Key Announcements Discussed:

• Increased Insured Mortgage Limit: Starting December 15, the insured mortgage limit will increase from $1 million to $1.5 million, allowing buyers to borrow more with lower down payments.
• 30-Year Amortization for Insured Mortgages: First-time buyers and new-build purchasers can now access a 30-year amortization period, making monthly payments more affordable and potentially increasing buying power.
• Changes to Stress Test Rules for Mortgage Transfers: As of November 21, stress tests will no longer be required for mortgage transfers between institutions, easing the refinancing process for existing homeowners.
• New Refinancing Options for Suite Additions: Beginning January 15, homeowners can refinance up to 90% of the property's "as improved" value for adding legal rental suites, encouraging increased housing supply.
• Potential Future Changes to the Stress Test: Stephanie shares insights on the possibility of the stress test being further modified or removed in the future, depending on economic trends.

Tune in to gain a better understanding of these changes and how they can influence your real estate decisions in Fernie and beyond. Don't miss this essential episode for staying informed and navigating the evolving mortgage landscape with confidence.

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Transcript

0:00

Welcome to the property mindset podcast, where we explore everything real estate from market trends to practical strategies for success. Our guess share personal experiences and valuable insights, providing practical tips and tools for your own real estate journey. Whether you're a buyer or seller or an inspiring investor, a seasoned professional, or simply someone who loves real estate. This podcast is for you. So join us for engaging and informative conversations with some of the brightest minds in the real estate industry. Hello, and welcome back to the property mindset podcast, where we explore everything real estate from market trends to practical strategies for success. I'm your host, Phil Gadd. And today I'm talking with Stephanie Roughhead mortgage professional about new mortgage changes and what they mean for buying and selling right here in Fernie. I highly recommend you listen to this one all the way through. It's a very much of a conversational piece. Not much editing in this one because there's some absolute nuggets in here. If you're looking to get pre-qualified in this current market right here in Fernie.

phil-gadd_2_10-18-2024_100323: 1:13

So welcome back, Stephanie, to the podcast. Uh, great to have you back and, uh, super interested to hear what, uh, you have to talk about, uh, the mortgage changes that we've got right now.

steph_2_10-18-2024_100323: 2:09

Yeah. Awesome. Welcome. Well, thanks for, thanks for having me, Phil. Always a pleasure to, uh, to be here and, and chatting with your listeners, but yeah, lots of big changes happening, uh, recently in the mortgage space. So, um, Canada's Minister of Finance, Christia Freeland, um, the Office of the Superintendent of Financial Institutions, they've been busy, lots of announcements. So likely people are hearing these things on the news. Maybe other social media, um, really with that focus that, you know, our government does know there's a housing crisis, um, and so looking to bring some new reforms to ultimately help Canadians qualify to be homeowners. Um, I don't think it hurts or it's a coincidence. It's also an election year too, so likely that has something to do with it. Thanks. But, um, but yeah, there's been a lot, a lot of talk, a lot of different, um, like I said, focuses and things that are coming out. So I wanted to jump on here, obviously, today to be able to share with people, um, what those are, but more importantly, what they may mean to a borrower, um, at kind of more of a high level. So if we go back to the first announcements, um, which started in September, there was actually three policy changes that were announced that are going to be coming into effect December 15th. So those are going to be, um, all happening at that same time. So the first big one is the price cap for insured mortgages is going to be increasing to 1. 5 million for everyone. So for simplicity's sake, I'm going to say 1. 5 million. When in actuality, it's 1, 499, 999. That's a little bit too much of a mouthful. So I'm going to just, we're going to say that it's 1. 5, but that actually is the cutoff. So for people to remember, an insured mortgage is any time that you have less It is a requirement that you have the backing of CMHC or the mortgage insurer. This is a Canada wide policy and up until this announcement, that threshold was 999, 999. Or a million, as we would say for simplicity. So they're increasing that by a full 500, 000, um, which is huge as a huge change. They haven't made a change to this since I believe 2012. So what does this ultimately mean now that you have the ability to have an insured mortgage? up to 1. 5 million. So really what this means is two different things for borrowers right now. It means that people can borrow with less down payment at higher purchase prices. So that's huge, right? I mean, you know, I know in our market in, in the Valley, especially in Fernie, right? There's, there's a significant amount of listings that are over, um, that seven figure price point. And so now, or starting December 15th, For a purchase of up to 1. 5 million, you now only need 125, 000 as a minimum down payment, rather than current rules that say you would need 300, 000.

phil-gadd_2_10-18-2024_100323: 5:12

Okay. Great.

steph_2_10-18-2024_100323: 5:14

quite a bit, right? That's a lot. A large chunk of money. So, um, the other thing that people may not be aware of is that insured mortgages actually get better interest rates. So when you have a mortgage that is backed by CMHC, you get a better interest rate than somebody who has a 20 percent down payment, believe it or not. Um, so now this gives people the opportunity, um, to get into a million dollar plus home, um, with better interest rates, which ultimately are going to result in lower monthly payments. Um, Yeah, so I mean, so, so good news for sure across the board there. One thing to remember though, of course, as a CMHC insured mortgage, there's always a premium. CMHC charges a premium. It's added to the mortgage, and that's the case no matter what price point you're buying at, if you have less than the 20 percent down. Um, and it's going to be, you know, if you were to It's going to be a hefty premium. It's about 57, 000 that gets added to the mortgage. So it's not like this flexibility doesn't come with a cost. It does, but again, it is good news because it's going to allow more people who maybe don't have such a large down payment saved to get into a house that more aligns with what they're looking for.

phil-gadd_2_10-18-2024_100323: 6:31

Yeah, sure. Okay. So let me and so if you say we're going for the 1. 5 Your down payment would be the max. Yeah, three three hundred. Was that correct?

steph_2_10-18-2024_100323: 6:43

As of today, yes, as of today, any, yeah, any purchases over a million require a minimum down payment of 20%,

phil-gadd_2_10-18-2024_100323: 6:51

right. Okay. All right

steph_2_10-18-2024_100323: 6:53

so that'll

phil-gadd_2_10-18-2024_100323: 6:54

Yeah, no, that's cool. I mean My brain works is, yeah, that's, uh, it's still going to be quite a hefty mortgage for someone. Um,

steph_2_10-18-2024_100323: 7:04

Well, absolutely, and that is what I would say, I don't even want to say some of the critics to these policy changes are ultimately saying, myself included, I mean, I won't lie, is you're right, I mean, it's not going to fix the problem by any means, and you're right, It's still going to be a very large payment. So for somebody qualifying at that price point, you're still looking at like a double income, strong income households, right? To have a mortgage payment of that size. It's just essentially allowing those who may be, I mean, we're seeing more and more where family is helping with these larger down payments, things like that. So this is just going to open it up for people that maybe don't have that ability. You know, they've done their own savings. Um, both individuals in the household have really great incomes. They just haven't been able to come up with that, you know, whatever it is, 200 to 300, 000 in down payment savings. So it's going to open it up for them.

phil-gadd_2_10-18-2024_100323: 7:56

Yeah. Also, um, I suppose my, the way, the other way my mind works is, um, I'm right in assuming that if you're buying a fourplex, that would still considered a residential mortgage, isn't it?

steph_2_10-18-2024_100323: 8:08

It is. Yes. Yeah, it is. You bet.

phil-gadd_2_10-18-2024_100323: 8:10

so maybe an investor who doesn't want to put like so much down could look at this and think oh, Okay, well, maybe I could buy a few four plexes for like 1. 5 million with Putting less than 20 percent down

steph_2_10-18-2024_100323: 8:28

So yeah, so you have to be careful with that. If it was a fourplex and you were going to reside in one of the units, the multi unit insured program would come into play, but that requires you or a member of your family to live in one of the units. Doesn't have to be you, but it would have to be a dependent or a family member. So if it's, if it's being bought as a purely, pure investment property, um, rental, um, rental, like rental policy would still come into play, which is dependent lender dependent 20%.

phil-gadd_2_10-18-2024_100323: 8:57

Okay. Right. Right.

steph_2_10-18-2024_100323: 8:59

So a few intricacies there for sure.

phil-gadd_2_10-18-2024_100323: 9:01

Awesome. Awesome. Good. Well, you know, interesting, interesting stuff for sure.

steph_2_10-18-2024_100323: 9:06

Yeah, so the next one that they announced to along the same lines is that all insured first time home buyers can now get a 30 year amortization. So another change again to these insured mortgages, this one, I think, is going to have more of an impact to our everyday Canadian buyer, especially for our first time buyers. So the amortization is obviously the amount of time it's going to take you to pay off that mortgage. And currently, as of today, for a buyer that has less than. Then 20 percent down, they are only allowed to do a 25 year amortization unless it's new construction. And that's whether you're a first time buyer or a fifth time buyer. If it's an insured mortgage, you can only go to the 25 years. So by allowing it to extend to the 30 years and essentially stretching things out for five more years It does two things it ultimately will save you in your payments each month It'll lower your mortgage payments each month because you're now stretching it over a longer period of time So to give you an idea if you had a four hundred thousand dollar mortgage changing it from a 25 year amortization to a 30 year Amortization saves about two hundred dollars a month in payments. That's the difference For that five years, so that helps a little bit on the pocketbook, obviously from affordability, it's also potentially going to help first time homebuyers qualify for more because a longer amortization equals lower payments and which results in a higher mortgage preapproval or a mortgage approval. So if you previously qualified for a mortgage of let's say 530, 000, if someone was pre approved at 530, 000 as an insured mortgage, so with a minimum down payment, now with this change, being able to go to 30 years, um, you'll qualify up to 580, 000. So it's going to increase people's budgets at that price point to about 50, 000 more.

phil-gadd_2_10-18-2024_100323: 11:00

Okay. Interesting. Um, I've had a interesting thing on this actually, um, own personal experience, uh, currently got a mortgage with, um, local credit union, uh, residential. Um, we're looking to get a line of credit, um, to help out with some, uh, educational stuff and, uh, And, and bits and bobs and, um, it got approved. And, uh, one of the conditions was that the current residential mortgage went to the current term, went to a 30 year amortization instead of a 25. Um, and I'm like, Okay. That must be because of the new rules, which I was aware of, but I didn't realize that that would apply to that situation, but obviously it did. Um, and it's great for us because a month, well, we pay every two weeks and that, that payment has gone down significantly, um, which is, which is great for affordability. Um, but yeah, that's just something that happened recently to me. So, um,

steph_2_10-18-2024_100323: 12:02

That would likely be actually it's a little similar, similar, but a little different just in the sense of when you're actually adding, because you would have obviously more than 20 percent equity in the property. So, adding a line of credit to the property is like under a collateral mortgage program. So, they likely wanted you to perhaps stretch out the payment on the mortgage just to get servicing ratios to work. Normally, that's not, that wouldn't generally be a condition for everybody necessarily. But generally, it's good that and I mean, it works so great in your favor. So. So why not? But yeah, the insured mortgages with less than 20 percent down, um, have more stringent rules than when you have more than 20 percent or more equity. These things have always been in play for those people. It's just when you've been insured or less than 20 percent down that they're now making the changes to.

phil-gadd_2_10-18-2024_100323: 12:50

Okay. Cool.

steph_2_10-18-2024_100323: 12:51

But yeah, but very similar, but similar impact for

phil-gadd_2_10-18-2024_100323: 12:54

Yeah, definitely. Yeah. No, cool. Um, uh, just, I want to ask a question. It's a little left field, maybe from where we're going right now, but, um, is there, do you, in your industry, is there like an, an average mortgage amount that, that like you would get average sale prices? Do you have that? Do you have that as a stat? Is that relevant? Useful? I mean, I don't know, but I just, just popped into my head then when you were talking about The last one and I just, uh,

steph_2_10-18-2024_100323: 13:22

Yeah, for

phil-gadd_2_10-18-2024_100323: 13:23

Is it, is it, is it an, is it something that you, you're, you know, mortgage professionals look at, is it something that I just, you know, curiosity more than anything,

steph_2_10-18-2024_100323: 13:34

For sure. Yeah, no, absolutely. I would say more on like a macro level, like they know the statistics across Canada, but we don't have anything like region wise, not like, I mean, because the data is all over the place. Right? I mean, I could have a client purchasing a one, but 5 million dollar home, but only needing a 300, 000 dollar mortgage. Right? So, um, whereas somebody else could be buying a 600, 000 dollar home and having a 500, 000 dollar mortgage. So it's really, I think across Canada, there's still say, and I mean, there's so much disparity across Canada, because, of course, you've got Vancouver and Toronto in there driving prices up, and then you've got, you know, more rural settings, driving prices down. I think it's still saying the average Canadian mortgage is on the high end of 400, 000, like. 400 to 450, but you're certainly going to find that that's across Canada. That's an average across Canada. So yeah, unfortunately not specific data

phil-gadd_2_10-18-2024_100323: 14:28

No, sure.

steph_2_10-18-2024_100323: 14:29

area. Yeah, but it would be, it would be interesting to see for sure.

phil-gadd_2_10-18-2024_100323: 14:33

no, no, definitely. And, you know, just because of the recent years where mortgages obviously have gone up, I think a lot of people probably, um, including myself, um, have You know, still have a really good rate for another couple of years, but, um, you'll probably get on to it. Um, well, we might talk about it, but, you know, the things coming down the road very shortly, probably, including next week. Um, we might start seeing rates, you know, heading back towards those numbers anyway.

steph_2_10-18-2024_100323: 15:00

yeah, well, and it's and it's a good, um, it's a good conversation, you know, Phil at this point, because you're right. Inflation numbers came in, um, 1. 6%, right? I mean, this all started when inflation was at 8%. So, you know, 1. 64 on the estimates of 1. 8. And really, I think as of this morning, when I did the Czech Economist study, 78 percent of economists and analysts are now predicting a 50 basis point rate cut at next week's meeting. So, which jumped huge on the inflation announcement prior to that, it was less than 50%. Um, so just these inflation numbers really seem to solidify that. Um, and, you know, like, to your point about rates, we've already, even just in the last year, and I want, you know, to point this out for anybody listening, like, waiting for lower rates, rates have already come down, like, a 5 year fixed in the last 12 to 18 months has already come down 1. 7%.

phil-gadd_2_10-18-2024_100323: 15:55

Right.

steph_2_10-18-2024_100323: 15:56

So, it's also, you know, when people are saying, like, we're waiting for lower rates, like, people have to be really careful with that, right? Because where is the lower rate, you know, so they're certainly much better. We're now, um, you know, for a 5 year fixed, again, depending on your circumstance, if it's insured or not, low 4s, high 3s, those are normal rates. So there's obviously still room and work to be done on prime, which is what a variable rate mortgage is based off of. And that's what the Bank of Canada announcements directly impact is prime rate only, not the fixed rates. Um, so it's, so for anybody sitting on the fence, that's like waiting for rates to go down anymore. I would certainly challenge that right at this point. point to start saying like, Hey, you know what? I don't know how much more we're really going to see in fixed rates, maybe a half percent, right? Not as much as prime needs to go, but prime bank rate and fixed rates are not directly correlated. So, so they have come down. They're much better than where they were for sure.

phil-gadd_2_10-18-2024_100323: 16:56

Yeah. Yeah, for sure. Um, okay. Great. Um,

steph_2_10-18-2024_100323: 17:00

We'll side side convo, but still important,

phil-gadd_2_10-18-2024_100323: 17:02

yeah, no, definitely, definitely right now. Um, so yeah, sorry. I'll, uh, I'll let you carry on.

steph_2_10-18-2024_100323: 17:08

Yeah, no, all good. And just the last of the three first announcements was, um, insured new build buyers can get a 30 year amortization. So this is now previously they actually had changed this so that any first time buyers who were buying a new construction could get the 30 year amortization that's already in place. And now they're opening it up to say anybody who's, um, doing an insured mortgage for a new build can get a 30 year amortization, not just first time home buyers. So the first situation is for only for first time buyers. But now they're saying if it's new construction, new build anybody, whether your first time buyer or anybody else can get, um, a 30 year amortization. So obviously this is the government's way of trying to incentivize people to Buy new construction so that builders will want to keep building, which is really what Canada ultimately needs to do. If we're going to do anything about the housing situation, we need to increase the supply. So, um, so that same results that we talked about before, that difference between the 25 and 30 year, um, but that this one in particular applies to anybody who's buying new construction can get the 30 year insured mortgage now.

phil-gadd_2_10-18-2024_100323: 18:18

Cool. Yeah. Awesome.

steph_2_10-18-2024_100323: 18:20

so the next big round of announcements came shortly after. Again, it's been, it's been busy. These ones are actually going to start a little bit sooner on November 21st, and this one is actually talking about existing mortgage holders, um, and what happens when they want to move their mortgage. So the announcement basically was saying that the stress test is not going to be required. Here's how you when you were looking to move your mortgage to another institution, um, or what we call a straight switch. So like, ultimately what this means is that, like, let's think about what the stress test actually is just as a reminder for people. So the stress test is where you when you get your mortgage, we are not qualifying and approving you on the interest rates you're actually getting. The stress test says we have to use a rate of five and a quarter percent. Or the interest rate you're actually going to get on your mortgage plus 2%, whichever is greater. So this came out back in 2016, I believe it was, and honestly, thank God for it, personally, because that is what is saving a majority of Canadians now coming out of the pandemic. Their renewal, because if they had qualified at that 1. 9 or 2. 1 percent that they got, they would probably be in for some serious hurt now when they're coming up for renewal at four and a half or 5%, but they qualified them at that time at five and a quarter. The challenge has been though now when someone's mortgage rate is five or five and a half percent, they're having to qualify at seven or seven and a half percent. And that's been really hard for a Obviously, that's a substantially higher payment that they're having to qualify. So now when your mortgage comes up for renewal, if your financial situation has changed at all, and your bank comes to you with a renewal offer, and they don't have to requalify you to give you that offer, but if they're not offering you something very competitive, um, obviously, Um, you're going to want to shop around, see what else is out there, but if you find a great rate somewhere else, and now you're being told, well, I have to qualify you at 2 percent above that rate, um, you might not qualify for that. And so it was basically pigeonholing borrowers into staying with their current lender if they couldn't qualify at that stress test elsewhere. So it's like. Give like an actual example. So if like, for example, if you had 300, 000 in a mortgage that was up for renewal, or you were wanting to move it, assuming similar amortization, no debts, things like that. I'm just trying to kind of keep apples to apples here, but you would need to prove about 81, 000 in income. at a 300, 000 mortgage. But after the change, and that's at today's rules, that's stress testing somebody on that 300, 000. But after the change, um, and no requirement to apply the test, you only need to show 71, 000 in income. So it's about a 12 percent difference. So it's not huge, but for a lot of people, and I've seen it firsthand, it would make the difference. It was the difference between them getting to go for a lower rate or a better product somewhere else and having to. So, um, so it's a good, it's a good new story in the sense that people can now shop around easier and not feel like they have to be tied to something, um, because they just didn't have any other option. But I do want to also remind people, the stress test itself is not going away. Totally. This is a, this is something people are kind of getting confused about. We still have to stress test when we're qualifying people for new purchases. If you are refinancing your mortgage, like in your case, Phil, the scenario you talked about where you were getting the line of credit added, that would be considered a refinance stress. I still apply in those situations. Um, but so it's really only when you were just, my mortgage is up for renewal bank a, and I want to shop it around and take it exactly as, as it is at bank a and take it somewhere else. That, that is the situation where now they no longer have to add that 2%. To the rate to qualify.

phil-gadd_2_10-18-2024_100323: 22:25

Okay. Cool. Yeah, no, it's good. Yeah. Yeah. Great.

steph_2_10-18-2024_100323: 22:28

yeah. Yeah. So, um, and actually talk that the, I don't know, rumors, you know, rumors in the market rumors, um, in the mortgage space is that we may see the stress test go away. It's hard to say. I mean, I find that hard to believe, considering again, it's saved a lot of people over these last few years, but now that interest rates, um, yeah, are, are more normal again. Maybe they're feeling like that might be something. Um, that could go. So we'll see. We'll see what happens with that. Who knows? Mm hmm

phil-gadd_2_10-18-2024_100323: 22:59

mean, it's interesting. I mean, you could go into a whole nother podcast about interest rates and what it actually means. Means that the economy is actually doing. But I, I do sort of see recently things are just pulling back a little bit. I don't know if that's because people are waiting for this news on, you know, lower interest rates. Whether you jump in now. Or why, um, you know, I always say to people very similar to what you said earlier, um, you know, with, with kind of prices now, the, where they are, especially in our market, which I still think we haven't seen the top. To be honest, especially with other markets, such as, um, you know, Camorra and Squamish and, and, uh, sorry, Whistler, but, um, you know, prices are actually, um, you know, you know, they have, they have gone up year on year, but prices are still fairly decent. And one thing, in my opinion, if the market's going to be flooded with a lot of, affordable money, uh, IE at 3 percent instead of wherever we are now, 4. 25. Um, that's going to do one thing in my opinion, that's going to drive prices up. So, um, yeah, so

steph_2_10-18-2024_100323: 24:14

More, more competition, right? More multiple offers. I mean, all of these rules are going to help more people qualify. I mean, if you think about even that, the first one we talked about, about now needing, um, only the minimum down payment to go up to 1. 5 million. Right now, the barrier, barrier to entry on that million dollar price point is having the 20 percent down payment, right? So now all of a sudden, that price, anything in that price space, you've opened it up to a whole bunch of people that. Qualified but didn't have the down payment potentially. Right. So more competition, multiple offer situation. Right. Um, so Absolutely. Yeah.

phil-gadd_2_10-18-2024_100323: 24:51

So if you're listening to this and you are on the fence and you're thinking, well, blah, blah, blah, I would highly recommend you speak to Stephanie and you get pre qualified and then you come speak to me and we can go buy a house. Um, Yeah. Um, just, uh, what's, uh, Stephanie, what's the best way people can get a hold of you?

steph_2_10-18-2024_100323: 25:09

Um, anyway, um, Instagram, Steph Roughhead mortgages, um, email me Stephanie roughhead@dlcme.ca. Um, phone(250) 423-9851. Text, whatever you prefer. So.

phil-gadd_2_10-18-2024_100323: 25:26

Awesome. Awesome. I pre jumped the gun there. Is there anything, are you talking about anything more? Sorry.

steph_2_10-18-2024_100323: 25:33

You know what, Phil, we got one last one. And this is a good one. This is a good one. No, no, no. It's, it's, it's a good one. I feel like we're sort of saving the best for last, especially anybody in a market that's got rental opportunities. So this third announcement is going to come into effect January 15th, and it's actually bringing back insured refinances for the purposes of constructing one or more suites on your property. This one's pretty cool. So, um, so again, what does this ultimately mean? Right? That sounds like just kind of a lot of big terms and words, but refinances right now in a refinance, again, is adding a line of credit, increasing your current mortgage, things like that. The rules were changed a while back that said you could only do that. You had to leave 20 percent equity in your property, meaning you could only borrow up to 80 percent of the value of it minus any current debt that you have on it. Okay. But starting January 15th, they are going to increase that to being to 90 percent um, loan to value and which is just going to be determined. And the cool thing about this too, is that 90 percent loan to value is going to be determined based on the as improved value of the property with the, the suites that you're looking to add. So let's, let's, again, let's give a scenario, right? So we can actually put this into practice. So let's say you've got a home worth. 650, 000 as it stands today. So this owner wants to build a basement suite and a garage suite, above garage suite, right? So these additions, adding this basement suite, adding this garage suite, um, is going to increase the value of the home to 850, 000. Let's say, right, all of a sudden, you've got a nice suite above the garage. You've got a nice suite in the basement. Um, and of course, Phil, you could probably better determine if those are accurate values, but we'll use them for the purposes of

phil-gadd_2_10-18-2024_100323: 27:25

Yeah. That's fine. Yeah.

steph_2_10-18-2024_100323: 27:28

And so, so based on these new rules, they can now borrow 90 percent of the 850 of the amount. So that would be 765, 000 minus any existing mortgage amounts owing. So let's take it the next step. So now let's say that you have this individual has a 550, 000 mortgage, so they can borrow up to 765 with these improvements. They've got a current mortgage of 550. This is going to give them access to 215, 000 in equity or in funds potential funds available for them to do these projects. So they've, they've costed it out and they can do the two suites for 150. Let's say they're going to be able to do do what they want to do for 150, 000. So. At the end of the day, they're going to borrow another 150, 000 to put in a basement suite and put in this garage suite. And let's say the potential rent come rental income is like 3, 000 a month, which I think is fair to say in our market. If you had a basement suite and a garage suite, I think 3000 is probably conservative. Really? The cost to borrow this 150, 000 is only like 800 a month. So all of a sudden now this individual, right? I mean, if you, Take off the cost of the extra funds they've borrowed is still going to leave them 2, 200 in surplus funds right after the fact after they've paid for this additional lending and I mean, like, sky's the limit for that money, right? Put it against the remaining 525, 000 mortgage and you'd be done in no time, right? Or, you know, help with cash flow. So this is really cool and I think there's a lot of potential for this change in our market. Um, so I mean you still do have to qualify under normal rules, um, but the other neat thing about this is that rental income can help you qualify.

phil-gadd_2_10-18-2024_100323: 29:21

Right, right. Cool.

steph_2_10-18-2024_100323: 29:22

you're getting 3, 000 a month for these suites. You're looking for more money to borrow. We can actually use the potential rental income to help you qualify. Does have to be long term rentals. Um, so that's been a point they've been pretty clear about. So no short term rentals, um, regardless to what your municipality allows. The government obviously wants to see people giving long term, um, housings for people. On the side note, though, they haven't said how long it needs to stay long term for. So who knows there might be might be an opportunity there and of course, like anything, the, the, the suites have to meet your like municipalities zoning and be self contained. It's got to be a proper suite. So own separate entrance kitchen, separate bathroom. Or sorry, a separate bedroom, that sort of thing. So kind of no, no, no garden shacks being called a suite.

phil-gadd_2_10-18-2024_100323: 30:10

Now that I'm what's this program called?

steph_2_10-18-2024_100323: 30:13

You know what, they haven't really, there's not really a name. It's just basically going to be, yeah, it's just a change to current rules. And like any new announcements, I mean, right away I have, you know, probably 10 different questions that haven't been answered yet. So like any new policies, we're going to hear more of the details as they get closer to launching it. But it's just really a change to refinance rules that say, you can now refinance. It's insured up to 90 percent if the purposes are to construct more units on your property.

phil-gadd_2_10-18-2024_100323: 30:43

Cool. Yeah, that sounds great. Um, I've actually got a real life example. I wondered if it would work because we've, this is something that, you know, potentially down the road that we're thinking about doing. Um, you know, our current unit where we, where we currently reside, uh, it's big enough to potentially, Um, uh, separate off something we were thinking about doing separating off creating a Maybe another strata unit Uh, that would be for us to live in and then the other unit would be It would be three beds Uh, we would put a kitchen in and have a dining room living room. Um, would that would that work for a program like this?

steph_2_10-18-2024_100323: 31:25

Yeah, I think potentially it for sure would be worth exploring, you know, based on, based on, the rules. I mean, it is an insured program, um, so, you know, as long as it is going to fall under all the other insured rules, um, which are also changing along with this, right? So, yeah, I think there for sure could be potential, um, here for that, definitely.

phil-gadd_2_10-18-2024_100323: 31:45

Awesome.

steph_2_10-18-2024_100323: 31:46

And it's great for Fernie because we've had the recent zoning changes

phil-gadd_2_10-18-2024_100323: 31:49

Yeah, exactly. yeah, Yeah. Yeah. And I've just had a client this week, actually, which is this is perfect to go back to them and say, listen, do you know about this? Because, um, that's exactly what they're looking to do. Buy an older house. It's got a full city lot. You know, we've spoken about RSS residential, small scale, and, um, Yeah, this could be an option down the road when they want to, um, you know, increase the dwelling size of the, of that lot. Um, yeah, fantastic. Good stuff. Um, all right. Well, lots of amazing information in the last half an hour. So, um, Again, if you, uh, uh, well, if you, if you listening to this point, well done. Thanks very much. Um, love to have you here always. Um, and once again, Stephanie Ruffhead, um, let the viewers know how they can get hold of you. So there's, they've got two, two times, two opportunities now to,

steph_2_10-18-2024_100323: 32:47

Yes, I appreciate that, Phil. You bet. Uh, you know what, 250 423 9851, text, uh, call, and then email stephanie. roughhead, uh, only one h r o u g h e a d, at d l c m e. And I'm online, I'm on Instagram, so yeah, I would love, always open for a chat, right? You never know if you don't ask, so,

phil-gadd_2_10-18-2024_100323: 33:10

Exactly, exactly. And I think, um, especially with everything coming down the line, it's absolutely prudent to get a pre approved for anything that you're thinking about, um, before, uh, well, I mean, before and whilst, uh, you're working with someone like myself, uh, a local realtor here in Fernie. Um, so Stephanie, thanks once again for coming on the podcast. Uh, like I said, Lots of fantastic, uh, um, information in the last half hour. So make sure if you are listening, you go back and relisten because, uh, you want to make sure that you, uh, are actioning some of this stuff. It's a really good, thank you.

steph_2_10-18-2024_100323: 33:46

awesome. Thanks, Phil.

33:47

So thanks for listening to the property mindset podcast. If you have any questions about buying or selling here in Fernie and want to discuss the Fernie real estate market even further. Then you can definitely reach out to me. I'm always here to help. Stephanie has given her contact information in the piece. If you have any direct. Questions about mortgages and please feel free to reach directly to Stephanie. So be sure to subscribe. Uh, if you like what you're hearing, leave a comment and share this episode. Uh, with anyone, you know, who's thinking about buying or selling real estate right here in Fernie. I'm Phil GAD stay focused, stay informed. And keep building the property mindset.