Many homes in Vancouver have what is referred to as a “mortgage helper”; that is, the inclusion of a suite or self contained unit, usually situated on the ground floor or in the basement, that is meant to be rented out in order to generate additional income for the home owner.

In Alberta, and Calgary more specifically, real estate listings make mention of an “in-law suite”, which is essentially the same thing and consists of a bedroom or two, living area, three-piece bathroom and a kitchen.

Homes that include these suites are a hot sell for more reasons than one. First of all, they make paying off a large mortgage faster and mitigate the financial strain that owning a home can create. Second, it is sometimes easier to get approved for homes that have an in-law suite because the borrower can cite the potential money generated from the rental space as income. They aren’t called “mortgage helpers” for nothing, after all.

It is extremely important for you to have all the facts about the home you are buying, especially if you plan on purchasing a home with a suite. Many people assume that there are few, if any, rules attached to income suites but that is unfortunately not the case. There are some facts you should know that will save you from disappointment when it comes time to approach the bank for a mortgage.

There are three main types of suites: legal and conforming suites, meaning that they have been built to code (i.e. separate entrance), have been inspected by a qualified inspector and are approved by the city as safe for human habitation; illegal suites often don’t have their own entrance or are built on a property that is not zoned multi-family – at a minimum R2; finally there are grandfathered suites (legal, non-conforming) which were built prior to the current laws and while they would not be considered a legal suite if built today, were grandfathered because of when they were built.

As long as the suite is legal, either conforming or non-conforming (ie. the City recognizes it as a suite), the rental income can be used to help qualify for the mortgage.

Some other things to consider when purchasing a house with a suite:

  1. Be sure to gather all of the information from the City with regard to it’s status as a legal suite prior to purchasing such a property  so that you are not prevented from legally renting the space AND you and your tenant can obtain insurance for the suite or it’s contents. If the suite is not legal, you may also have difficulties enforcing any rules with tenants
  2. Are there are tenants already occupying the suite who wish to stay following the sale of the house. If, for example, you really did want the suite for your mother-in law, you cannot simply ask the tenants to leave. You must abide by not only the landlord Tenant Act, but also the terms of the lease under the previous home owner

The process of sorting through the complicated rules surrounding rental suites can add a lot of stress to the already overwhelming task that is buying a home. I can help you wade through the jargon and get the best rate possible. Why do more work than you have to? Contact me with any questions you have about your mortgage.