A few weeks ago, Equitable Bank launched a new construction financing product for laneway homes and garden suites in Canada. Here is the announcement. This is generally good news. When we completed Mackay Laneway House back in 2021, the banks hadn't yet gotten their head around this housing type. I remember RBC getting tripped up on the fact that there were two detached dwellings on the same residential lot.
That said, there are some important conditions around this new mortgage product:
"The Laneway House Mortgage is offered on properties that are free and clear, or in combination with new or existing mortgages where Equitable Bank holds, or will hold, the first position."
In other words, they want no debt on the property or they want sufficient equity in the property -- but Equitable Bank needs to hold the mortgage. I suspect that most of the people who have built laneway and garden suites have done so by leveraging the equity in their main house; so I'm not sure how "innovative" this product will end being in practice. You'll also need to switch to Equitable Bank if you have your mortgage with another lender.
Still, if you're looking to build one of these homes -- and I continue to believe that they make a ton of sense both financially and from a city-building standpoint -- it wouldn't hurt to see what Equitable Bank can offer.
