Small Space, Big Potential

Secondary suites can help support your loved ones, boost your income, or simply allow a little extra room to breathe for large families. At CUA, our Secondary Suite Mortgage can give homeowners an opportunity to maximize the value of their property without having to pack a single box.

With rising costs, these suites can be used as long-term rentals, providing additional income for homeowners, and can also be built to provide supportive living for aging relatives or independent living for adult children.

What is a secondary suite?

Secondary suites can take many different forms. They include separate buildings on your property, such as backyard or laneway homes, basement apartments, or in-law suites which might be located within the main home or in a separate area, such as a loft space above a garage. It is a self-contained living space, containing at minimum, a bedroom, bathroom, kitchen, living space and its own entrance. 

What are the benefits?

There are many advantages to adding an additional unit on your property, including a potentially reduced mortgage cost, increased resale value and flexible living arrangements.

  
If you are planning on renting out the unit, this will give you a new income source. By putting the full rental amount, or a significant portion of it, towards your mortgage each month, you can significantly reduce the amount of your mortgage and total interest payments over time. If you are designing the suite to be a long-term rental, you might want to consider energy efficient appliances and durable finishes on things like light switches and drawer pulls.

 
A secondary suite could also offer you peace of mind for your loved ones. If you’re looking at flexible living arrangements, you can easily customize the suite to meet your family’s needs. If the space is going to be used for aging parents, you can create a space to meet their current or future mobility needs. This could include lowered sinks, ramps, and wheelchair accessibility.  You might be designing the space for college-aged or adult children who are just getting started in their career, are trying to save a down payment for their own home or are avoiding high rental costs. The suite can give them independence with the comfort of being close to home.

 
Finally, a secondary suite can increase the potential resale value of your home. Many home buyers view the extra space as a positive factor, including the potential for rental income. 

Considerations

Becoming a landlord: If you are becoming a landlord, there are a lot of responsibilities and time that is required. It’s important to understand all laws surrounding tenancies and ensure you vet tenants, if you’re planning to turn your secondary suite into a long-term rental. Loans Canada offers advice for becoming a first time landlord and best practices for vetting tenants, understanding tenant laws, and landlord responsibilities.

Rental agreements: Renting space to a stranger or family member can be challenging. A rental agreement can help when navigating difficult conversations and setting expectations. We recommend putting together a rental agreement for your renter to sign outlining the rental terms, expectations and upkeep required for the suite. The Nova Scotia Government has a standard rental form you can use.

Zoning: There have been recent changes to zoning throughout Nova Scotia to support housing development. For CUA members within HRM, you can visit this map to determine the zoning for your property. For anyone outside of HRM, please visit your respective municipality’s website to determine your zoning. Secondary suites are eligible to be constructed in most residential zones in the Province, however there are stipulations as to the number of suites you are allowed on a single property, varying from one unit to four units.

Insurance: Landlord insurance is not the same as homeowners’ insurance. Loans Canada explains the benefits of Landlord insurance and what is covered. You will need to reach out directly to your insurance company to let them know that you are adding a secondary suite. This is a very important step, as some insurance companies may void your home insurance policy if you try to file a claim and did not notify them that you now have a tenant. Your insurance company will work with you and the parameters of your current policy to determine if you should increase any of your coverage levels. They may also recommend including additional coverage such as rental default insurance, guaranteed income insurance, construction expenses in the event of damage or adding tenant insurance as a lease requirement for your renter.

Property Upkeep: It’s not just you on your property anymore. Before, it might have been easy to skip a day or two mowing the lawn, now as a landlord you must treat your property like a business. Being a landlord means wearing many hats and can involve tackling repairs and upkeep, along with managing different personalities.

Am I eligible?

A mortgage application for a Secondary Suite product follows the same requirements as a typical mortgage. It has similar contracted draws which become available at different phases of construction, just like CUA’s Construction Mortgage.

Some additional requirements for approval are: 

• The “as-improved” value of your property must be less than $2 million.

• At least one unit must be occupied by the mortgage-holder or be a person related to them. 

• The Secondary Suite must not be used as a short-term rental (such as an Airbnb or VRBO). 

• The property must be suitable and available for full-time, year-round occupancy and have year-round access.
  

If you currently have a mortgage with CUA, you can consolidate the loan for one simple payment. Depending on your specific scenario, the mortgage may be processed as a new mortgage application or you may be required to refinance an existing mortgage.

In addition, the Nova Scotia Provincial Government has recently released a Secondary and Backyard Suite Incentive Program, where applicants can receive funding for up to 50% of the project costs, up to $40,000. This Program can be used in conjunction with CUA’s Secondary Suites Mortgage to make your renovation even more affordable.

If you have any additional questions about our Secondary Suite Mortgage or would like to discuss if it is a fit for you and your family, please reach out to one of our Financial Advisors to assist.

To learn more about the CUA Secondary Suite Mortgage, visit cua.com/secondsuite.