How Secondary Suites Can Relieve Mortgage Stress in Calgary
August 7, 2020
If you are looking to purchase a new home in Calgary, you are likely going through the process of reconciling your finances with home prices to determine how much you can afford. Sometimes this financial review can leave house hunters frustrated with the limitations of their buying power, especially now with the tightened restrictions on mortgage lending implemented by the Canadian Mortgage and Housing Corporation (CMHC) in July 2020. Fortunately, there are options available to assist in expanding your purchasing power. One such opportunity is purchasing a home that has a secondary suite.
A secondary suite, as defined by the City of Calgary, “is a dwelling unit contained within the main residence, such as a basement or in-law suite.” Legal secondary suites meet requirements laid out by the city regarding structural design, entry and exits, and utility services. Homeowners who invest in owning a legal secondary suite can often ask for higher rental fees due to the increased privacy and safety of the suite meeting the city’s requirements.
When approaching your bank for a mortgage, a home that has a legal secondary suite will expand your buying power as the CMHC will consider your future gross rental income as part of your total annual income when reviewing an application for insurance on a two-unit owner-occupied property.
For example, if your household income was $100,000 before taxes, your non-household expenses were around $2,000 per month, and you were prepared to make a down payment of $30,000, with mortgage interest rate of 2.40%, you may be able to afford a home priced up to $368,599. Keeping those same parameters but increasing your household income by $12,000 from a secondary suite rented out for $1000/month, you may be able to afford a home priced up to $463,407. By factoring that rental suite income into your application, in this scenario you can increase your buying power by about $94,000. Connect with a mortgage specialist for more information.
If you were to look at purchasing a $420,000 detached single-family home in Calgary, with a $30,000 down payment, 25-year amortization, 5-year term, and an interest rate of 2.40%, you can expect to pay about $1,725 each month in mortgage payments. Now consider the savings of having a tenant in a legal secondary suite: depending on amenities and square footage, you could rent a legal secondary suite in SE Calgary for $900-$1300 per month, covering at least half of your monthly mortgage payment.
In Copperstone at Copperfield in SE Calgary, Vesta Properties is now offering new modern single-family homes with legal secondary suite options. Homebuyers have the option to pay for an upgrade to have the basement of their new home developed as a secondary suite that meets Calgary’s requirements for a legal second residence. This empowers the new homeowners to rent out their basement suite as soon as they take possession of the home, instantly buffering the financial burden of the mortgage. With the additional income from the secondary suite, home buyers also have the benefits of increased buying power so it becomes possible to afford a home with a larger living space for your family or with additional upgrades that may have been previously unattainable.
Vesta Properties has more than 30 years of industry experience and has successfully built more than 4,500 homes in award-winning neighbourhoods throughout Alberta and BC. Copperstone is Vesta Properties latest development in Calgary, a family-friendly, one-of-a-kind master-planned neighbourhood located within the award-winning Copperfield community. With new homes for every budget and lifestyle, you can live in an established SE Calgary community that is located close to schools, shopping, and transit and has plenty of green space and parks.
To learn more about new homes for sale in Copperstone and the legal secondary suite options available, connect with the Vesta Properties team in Copperstone today.