Garden Suite Build vs Status Quo
Bill 23 opened up garden-suite zoning across Ontario, and most municipalities now permit them as-of-right. The question is whether it actually pencils on your file. This compares two paths over your chosen horizon: stay put with the existing mortgage, or refinance to build a suite and cash-dam its eligible operating expenses through a HELOC. It sits at the intersection of mortgage, build, and tax decisions: three lenses that don't usually meet in one calculator.
Build with refi: net wealth advantage at year 10
+$60,778
Building beats Status Quo by this much, after suite rental income, cash damming, and home value lift.
Years to Debt Conversion
0 years sooner
In this projection, the mortgage balance reaches $0 in an estimated 30 years with the build, vs 25 years on Status Quo — that's Debt Conversion, not full debt freedom. The suite's HELOC balance (deductible, investment-purpose debt) remains outstanding at that point.
Tax refunds generated
$7,200
Effective rate (back-solved)
5.8%
Net of tax refunds + freed-payment value.
Pre-tax income equivalent
$0
Gross income you don't need to earn.
Net wealth, year by year
Total net position (home + investments − mortgage − HELOC) over time.
What this is actually doing
The build adds a rental unit to your existing home, financed by refinancing the primary mortgage (or partial-refi + HELOC). Each month, the suite's eligible operating expenses are paid from a HELOC instead of out of pocket, and that same dollar amount is applied to the mortgage as extra principal — never the suite's gross rent, and never more than the HELOC facility can actually fund. The HELOC interest is tax-deductible; annual refunds compound the paydown further. Net effect: a portion of the mortgage converts from non-deductible to deductible debt at the pace your actual eligible expenses and facility capacity allow, the home value grows from a higher post-build base, and the mortgage's non-deductible portion pays off years faster.
“Debt Conversion” above means the mortgage balance reaches $0 — it does not mean the household is debt-free. The HELOC balance remains outstanding at that point and keeps generating a deduction; this calculator deliberately doesn't assume what happens to it next.
Illustrative estimate, not a guarantee of any specific outcome. The Debt Conversion timeline depends on the HELOC facility actually having enough room for the full projection — see any capacity warning above. Real results also depend on local zoning approval, construction-cost variance, lender flexibility on the refi LTV, and CRA documentation discipline. This calculator sits at the intersection of mortgage, build, and tax decisions: usually a conversation worth having before signing anything.
How to read the result
A few thresholds the calculator can't flag on its own.
- Under a 7-year horizon, the math gets noisy. A garden suite is a 15-to-25-year compounding play. If you're modeling 5 years to see if it pencils for a quick exit, the answer is usually “stay put” even when the strategy is right for your file long-term.
- Watch the post-build LTV. Lenders cap combined loan-to-value (mortgage + suite refinance) at 80% on uninsured. If your inputs push near that ceiling, the realistic path is either (a) bring cash to bridge or (b) sell an existing rental to fund the build. The model treats the financing as available; the lender's appraisal and LTV math is the real constraint.
- The cash-damming layer is what makes the math sing. The build path here assumes you route the suite's eligible operating expenses through a HELOC — never gross rental income, never more than the facility has room for — and apply that same funded amount to the personal mortgage as extra principal. Without that structure, the build still pencils on long horizons, but the tax-deductibility benefit goes away, and how much Debt Conversion actually accelerates depends heavily on how much HELOC room the refinance leaves behind — see any capacity warning in your own results.
- Rent assumption matters more than build cost. A $50,000 build-cost overrun hurts once. A $300-a-month rent shortfall hurts every month for 15 years. When you're stress-testing this on your own file, push the rent assumption down before you push the build cost up.
What this calculator misses
v1 covers the core build vs status-quo comparison. It does not yet model: a third path where you sell an existing rental to fund the build (less refi, more equity); CMHC MLI Select financing on purpose-built rental components; the principal-residence-exemption decision when one of two homes is the rental; and zoning-specific permit-fee variance across municipalities. Those factors usually improve the build case further but vary too much to default-estimate.
The economics also improve when the suite's eligible operating expenses are cash-dammed through a HELOC. The strategy explainer covers the tracing mechanics that make the deduction stick.