Financing an additional dwelling unit or a multiplex conversion in Canada can be done through several options, depending on your financial situation, the property's equity, the project's scope and intended use.
As ADU, secondary suite and multiplex retrofit popularity rises, new specialized solutions emerge in the market.
Government support offered by federal, provincial and municipal governments in the form of low cost loans, grants forgivable loans and incentives.
Existing financial products offered by major banks, credit unions and non-bank lenders that can be leveraged for financing a gentle density project.
Alternative options include less prominent and emerging innovative tools that can be a part of a broader financing strategy.
Financing Options
Talk to a knowledgeable architect, designer, project manager, or general contractor to make sure your project budget is realistic. They can often tell you what similar projects in your area cost to build or have partnerships with financiers, or can provide referrals. Some financing products require you to know your project budget before you borrow, so it is important to carefully consider the costs.
Even for the newer finance options, it’s recommended that you find a second financing quote before signing your deal.
This is a reserve that you can tap if something is more expensive than you expected.
Closing costs, private mortgage insurance costs, and similar expenses are also important to include when comparing different financial products.
Remember that additional units will increase your home value, but you may see a corresponding increase in property taxes.
If you own a primary residence and are building an ADU or small multiplex, financing as an individual is simpler and more cost-effective. If you plan to scale your rental portfolio or need liability protection, a corporate structure may be beneficial despite higher costs.
If a property has 5 or more residential units or mixed commercial use, lenders classify it as commercial, requiring different financing terms.
Disclaimer
Highline Beta does not endorse, validate, or take responsibility for the accuracy, interpretations, conclusions, or opinions expressed in the featured materials and other content. Users should conduct their own due diligence and seek professional advice where necessary. While Highline Beta strives to ensure accuracy and keep content up to date, financing programs, grants, and regulations may change. We encourage users to consult with qualified financial advisors, lenders, or legal professionals before making any financial decisions.
