Welcome back to the wisdom lifestyle money show. I'm your host, Scott Dillingham. I have an awesome program that I want to talk to you guys about. It's available across Canada. I do do think it's best to tap in to an expert for the special program because most don't understand how it goes.
Scott Dillingham:However, what it is is it's through the government of Canada. So on your primary home, you can refinance your home with CMHC. You can get up to 90% of your home's value as a new loan, as long as you use these funds to add an So if you listen to this show, you know we're investor focused, you know we're about cash flow. We talked about multifamily investing, investing in The States, like all kinds of different programs and things. But this program is absolutely becoming the future.
Scott Dillingham:So many people across Canada are now adding more units to their properties. So you consider Ontario where Doug Ford said every every client can put three units or, like, have an up to a three unit property and you don't need to apply for a rezoning or anything. So they need more units, okay? Now different places have different rules and not all municipalities in Ontario are even following that three property rule, right? Like our three unit rule.
Scott Dillingham:Some people are saying no, like we don't support that. Some are going above and beyond and allowing more units. Consider Edmonton, Alberta, right? They'll allow you pending the lot size is correct, but you can do up to eight units there per lot, which is crazy, right? Like it's incredible.
Scott Dillingham:So in Toronto, this is known as the missing middle, right? Adding those extra units to your property. So it's something that's becoming very, very popular. So it's quite easy to do. So there's there's a couple of things that you need to know.
Scott Dillingham:So they do have a $2,000,000 cap. So you wanna keep that in mind too. Right? Because if you are where, you know, luxury home prices are in that range, right, it's not going to work. So we have to keep that in mind.
Scott Dillingham:Secondly, they don't allow you to refinance to have cash in the bank or to pay bills and stuff like that. It's only to add extra units. So I cautious everybody whenever they're doing like a mortgage plus improvements or renovating, I always encourage everybody to increase the quotes slightly for cost overruns or, you know, say, you know, you've priced it with materials at a certain price, but then materials go up, or you start demo and then you realize there's extra problems that you didn't know before. Right? So you always wanna have a little bit of a cushion.
Scott Dillingham:So, you know, theoretically, if you do that, there could be a small cushion, you know, left over for you to have extra, but I I would like me, I would just pay that down to the loan if that was the case. But that's that's up to you guys. But so, anyways, the funds have to be used to add a unit. Oh, couple of things here. So they're gonna lend the 90% on its completed value.
Scott Dillingham:So that's really, really great to know because obviously you haven't started the property yet and you might not have the equity in your home today. Right? But if we're adding a secondary unit, there could be the equity there. Right? So we can make this work even if you don't have the equity in your home to do it.
Scott Dillingham:So that's great. So that's one of the programs, is is we could tap into CMHC, we do a refinance. I don't know if you recall when you first purchased your home and you went with CMHC, you had a CMHC fee where they actually charge you a fee. This program has that fee as well. So the fee is built into the loan amount.
Scott Dillingham:So keep that in mind. Right? There's a cost to using CMHC. The premiums are going to be higher. It's gonna be a top up, especially if you already have the loan insured with CMHC.
Scott Dillingham:Right? The CMHC fee that you've paid on your loan amount, you won't have to pay, but the top up to get from your original loan amount to where you need to be to add this ADU, there's there's a top up premium. And the top up premiums are much higher than brand new premiums, but it will save you as opposed to getting a brand new premium on the whole balance because you're only paying on the top up. Right? So it's so you wanna keep that in mind too.
Scott Dillingham:So that's one of the programs with CMHC. We can actually do the same program with a few of the banks and different lenders we have access to, but they're gonna do it at 80% of the completed value, not the 90 like CMHC. But you can avoid the CMHC premiums if we go, you know, up to the 80%. But if we're gonna go to 90, obviously, there is a CMHC premium. In both cases, getting the thirty year amortization is no problem.
Scott Dillingham:So that's great because usually, for insured properties, if you're not a first time home buyer or you're not doing a new construction property, you're capped at twenty five year amortization. So now you can get to thirty, which is ideal. So what I encourage everybody here who's listening to this to do is book a call. There's gonna be a link in the show's description. Chat with an expert on my team.
Scott Dillingham:We always offer it's just something that we do sort of a strategy call for every investor or client, just to know your options. There's no obligations or anything. We present the options. If you like what you hear, you move forward. If you don't, you don't.
Scott Dillingham:But I encourage you to book that call just so you can hear what's possible and look into this, but it is something that's important. We do have a housing shortage overall. I'm recording this at the 2025. And, obviously, the economy is a little bit weird. The housing market slowed down a bit.
Scott Dillingham:Things are slower than normal. People are on the sidelines due to rate tariffs, but the good news is rates seem to be coming down. So we'll have to see how long the slowdown lasts. However, even with that being said, right, if if money's tight and and things are more challenging, having that extra rental income can absolutely help your family out. These units, depending on who you partner with, and we have experts locally, we have experts in Alberta, and and we can work with you on these these ADUs and connect you with people to help build, you know, providing you're tapping into us for the financing.
Scott Dillingham:We can share all these resources in our Rolodex with you so you can get started on the right foot. But I do wanna caution you that I have seen some people, whether it's a tiny home, ADU, laneway, you know, garden suite, there there's all these different names for it. But I've seen drastically different prices for a building by itself. You know, that's, you know, counts under this EDU program. The prices differ widely.
Scott Dillingham:So you don't want to overpay is what I'm trying to say. So get a couple quotes, reach out, we can help you to source, you know, a good contractor for you. Obviously, we can't say, oh, this is an amazing contractor, but we see the pricing, right? We see the pricing and we could say, hey, give this guy a call. Obviously it's up to you who you hire.
Scott Dillingham:But be cautious of that. And then secondly, right? Like, look at your layout, look at your floor plan. You don't necessarily have to add a unit in your backyard. We have some clients that are underpinning, So they're pitting their foundation, they're raising it, right?
Scott Dillingham:So they're digging deeper. So they're making their foundation deeper and they're adding a unit in the basement, literally as we speak. And that was cheaper for them than having somebody put one in the backyard. And actually, to be honest, you know, I know they got quoted for that, but I don't think they could have due to sizing, had, you know, one in their backyard. But it still came in cheaper to literally raise the house and then finish their basement.
Scott Dillingham:They had a side entrance, they're adding a second entrance. Now they're gonna have egress windows, right, because of the the proper height. So there's all these different things that you can do. It's just tapping into these these programs. But the one with CMHC is specifically on your primary home.
Scott Dillingham:If we're going conventional, we can look at doing this. So conventional is 20% down with CMHC. We can look at doing this on your existing rentals. Again, we have to follow the local municipality's guidelines. We have to see how many units they do support per property, and there's different steps involved in that.
Scott Dillingham:A lot of the contractors that build these properties, they can tell by looking at your lot size and the placement of your current house. Quite often these units can be added as long as it doesn't take up a certain square footage of your lot size, like your percentage of land is under X amount or over X amount, right, then they can move forward. So sometimes you'll build these units. I've been in some, I've got some pictures where it was two stories, but you gotta watch too because if your home is a single story, to build a second story ADU, right, to meet the square footage requirements, they may not allow you to do that because your primary building is shorter, so you have to apply for an exception. Every municipality will call it something different.
Scott Dillingham:Locally, it's called the variance. You have to apply for a variance. So that allows you to apply and if they approve you, then you can make a two story even if your house is one kind of thing. Do you know what I mean? So there's there's they're getting flexible, they're getting creative.
Scott Dillingham:And with some of the new policies coming out, right, like Bill 60, the bill for landlords that helps, you know, create more even ground, especially in Ontario, well, specifically Ontario. They're also enacting, you know, faster build processes, easier approvals permits. So that will help for these additional units to be completed much faster. So anyways, I hope this episode added value and showed you a program that you were not aware that you could tap into. Could call someone on my team and we will help guide you through all of this.
Scott Dillingham:And then, yeah, we'll go from there. But greatly appreciate you. If you liked this episode, please share it and like it. It means a lot to us. Thank you so much.