Mortgaging Laneway Suites in Toronto

Refinancing your home to build laneway suites in metro Toronto is easier than you might think. 

Laneway suites Toronto homeowners build in their own backyards are the perfect alternative to “illegal”, non-conforming rental units. 

They’re a reliable mortgage helper for the life of your home.

Quick Read

What is laneway housing in Toronto?

Where are laneway suites allowed in Toronto?

How do you qualify for a laneway house in Toronto?

How much does it cost to build a laneway house in Toronto?

Mortgaging laneway suites

Calculating house expenses

Laneway Suites, Toronto’s Affordable Housing Alternative

City of Toronto homeowner incentives for laneway suites allow you to borrow up to $50,000 to build a new home in Ontario. Provided your property qualifies, you may be eligible for a 15-year forgivable loan from the Affordable Laneway Suites Program. 

What is laneway housing in Toronto? The laneway suites Toronto allows are detached secondary living units on an existing lot with an entrance facing a public laneway. Living in a laneway rental is Toronto’s latest affordable housing alternative, and a great way for homeowners to generate extra income. 

All you have to do is:

  • keep rents affordable – no more than the annual City of Toronto average market rents for affordable housing for the entire 15 years
  • rent to single tenants making $63,400 or less or $96,000 for two or more tenants
  • get a building permit before you start
  • meet zoning and other bylaws
  • sign an affordable laneway suites contribution agreement
  • and be approved in advance for the development charges deferral program for ancillary secondary dwelling units.

Qualify for a Laneway Suite in Toronto

You may qualify if your residential property:

  • is in a R, RD, RS, RT or RM zone in Toronto East York 
  • abuts a public rear or side lane for at least 3.5 metres – private lanes don’t qualify
  • and is between 5.0 and 7.5 metres from the suite, depending on building height.

Your laneway suite must be no more than 10 metres long, eight metres wide and two storeys high and take up 30% or less of your lot. It can have a single unit with two bicycle parking spaces, but no other parking spaces are required. 

You can be as creative as you want, within zoning and bylaw regulations. Depending on their size and location, for example, decorative columns, decks, canopies, and other embellishments are allowed. 

How to Apply for a Toronto Laneway Suite

Your application goes to the City of Toronto Housing Secretariat, along with proof you have a Toronto building permit and are approved for the development charges deferral program for secondary dwelling units.

The secretariat sends you or Axess Law an affordable housing funding agreement to sign. Our real estate lawyer registers a mortgage or charge on title to your property for the loan amount. Approval from your current mortgage lender is needed. We negotiate that for you. 

Any funds you receive from the Residential Rehabilitation Assistance Program or Toronto Renovates Program will be deducted from the $50,000. Two quotes from building contractors are required with your application. The city will fund the lowest quote, up to a maximum of $50,000.

You provide the mortgage or charge document to the city, with a request for payment. Your confirmation letter from the city is proof funding is approved and construction can start. Don’t proceed until you have confirmation (prevent contractor’s liens), but you must begin construction within 120 days.

When your suite is complete, submit a request for final payment. Your tenants can now move in.

Who’s Building Laneway Suites

Nearly a quarter of Ontario homeowners have illegal suites in homes they bought or built. 

While they may bring in rental income, they could get you fined by bylaw inspectors. You may even be forced to start over just to meet city building codes. Is the expense and effort really worth it?

Having a laneway suite can increase your property’s appraised value. Future buyers see potential tenants or space for financially dependent adults or university students living at home. As long as they pay rent and meet the income threshold, anyone other than the actual homeowner can live there. 

Mortgage lenders calculate the income the suite brings in when deciding how much you or buyers can borrow against the home’s equity.

Real Costs of Building Laneway Suites in Toronto

Laneway suites under 0.09 metres cost around $200,000 to $250,000 to build (roofing excluded). Budget about $1,000 for permits and other city fees. Architect’s fees will cost you an average of $15,000. Land surveys are around $2,500 and installing heat, water, sewer, and electricity could set you back by $50,000 to $60,000.  

Mortgages for Income Properties

You’re way ahead with a laneway suite, especially when you can borrow to build. If you need more than $50,000 for your construction project (we assume you will), consider remortgaging your home

Refinancing consolidates mortgage debts. That keeps interest rates lower than applying for private mortgages or using a HELOC (home equity line of credit). And it allows you to use the value in your home to generate income.  

Before you apply for mortgages, remember that unless you subdivide your lot into two distinct properties with separate titles, laneway suites can’t be sold as individual dwellings. Ask a lender about financing before you start any construction. 

Why Building Permits Are Required

Municipal building permits make construction projects legal. Contractors can apply or help you obtain one. Provided construction starts within 12 months, your permit is valid up to your completion date. Starting development of any renovation or new construction without a building permit can get you fined. Just like an illegal suite, you may have to deconstruct your project.  

Why You Need a Real Estate Lawyer

When you need a licensed mortgage refinance lawyer, call Axess Law. We work with  your bank, credit union, or private lender to refinance your home.  

Our licenced real estate lawyer service searches the title to property for financial liens or municipal assessments that may need waiving or resolution before you can renegotiate the mortgage. Your Axess Law lawyer can meet with you, at your convenience, in person in the Greater Toronto Area or Ottawa or by video conference anywhere in Ontario. Ask us anything about financing laneway suites. Questions to ask real estate lawyers

Changing property titles names is easily arranged by your Axess Law land transfer lawyers. Our professional legal team makes joint tenancy arrangements to transfer part ownership in your property to a spouse or family member. Adding spouses to house title in Ontario. 

Your Axess Law real estate lawyer can pay land transfer taxes or organize land registry discharge of mortgage documents. Call us to arrange your mortgage financing.

Affordable Legal Services, Anywhere in Ontario

Access lawyers for less in the Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.

Using a virtual real estate lawyer

Hire a Licensed Real Estate Lawyer

Axess Law real estate lawyers are licensed and charge low flat fees to keep your mortgage refinancing costs reasonable. Our online web form makes booking quick and easy. Arrange in-person appointments or book online video conferencing calls in minutes. Dial toll free to 1-877-402-4277 from Ottawa or outside the Greater Toronto Area (647-479-0118 in Toronto) to speak with a live operator. Axess Law mortgage lawyers go online with you anywhere in Ontario 7 days a week or can meet you in person at any of our convenient Ottawa or Greater Toronto Area law offices

We have onsite parking and easy transit access.