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Marginal note:Low ratio loans

• 6 (1) A low ratio loan must meet the following criteria:

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  • (d) if the loan is not part of a pool of loans on the direct basis of which marketable securities are issued,

    • (i) the loan must be insured on an individual basis on either the day on which it is funded or the day on which additional money is advanced to the borrower as part of the loan’s refinancing,

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    • (iii) the loan must have been in arrears, have been insured when it fell into arrears and since remained insured, and, as a result, not be eligible to be part of a pool of loans,

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    • (v) the loan must be held or will be held in a registered retirement savings plan or a registered retirement income fund of

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      • (B) a connected person, as defined in subsection 4901(2) of the Income Tax Regulations, to the borrower;

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  • (i) if the loan agreement allows for fluctuations in the amortization period as a result of a variable rate of interest during the term of the loan, the loan payment must be recalculated at least once every five years to conform to the lender’s original amortization schedule;

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  • (k) at the time of the qualified mortgage lender’s initial approval of the loan or discharge of the outstanding balance of a prior low ratio loan, as the case may be, the gross debt service ratio and total debt service ratio must not exceed 39% and 44%, respectively;

  • (l) at the time of the qualified mortgage lender’s initial approval of the loan or discharge of the outstanding balance of a prior low ratio loan, as the case may be, if the eligible residential property against which the loan is secured contains only one housing unit, that unit will be occupied by the borrower or by a person related to the borrower by marriage, common-law partnership or any legal parent-child relationship; and

  • (m) at the time of the mortgage or hypothecary insurance application, the loan must be reasonably likely to be repaid, having regard to the borrower’s capacity to make the loan payments while paying their other debts and meeting their other obligations over the term of the loan, based on reasonable assumptions as to what the highest loan payment over the term of the loan will be.

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• (3) For the purpose of paragraph (1)(k), the gross debt service ratio and total debt service ratio must be calculated using the annual payments, in respect of the loan and any other loan with an equal or prior claim against the eligible residential property, that would be required to conform to the amortization schedule agreed to by the borrower and the lender if the interest rate were the greater of

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  • (b) the five-year conventional mortgage interest rate, as determined weekly by the Bank of Canada, that was in effect on the Monday of the week in which the calculation is performed.

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Marginal note:High ratio loans

• 9 (1) A high ratio loan is to be governed by these Regulations as they read on October 16, 2016 if, on any day before October 17, 2016,

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• Marginal note:Low ratio loans

  (2) A low ratio loan is to be governed by these Regulations as they read on October 16, 2016

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  • (b) if the condition referred to in paragraph (a) was met on or after October 17, 2016, the loan is funded not later than

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    • (ii) October 31, 2017, if the loan is documented as being scheduled to be funded not later than April 30, 2017 but was delayed due to unforeseen circumstances beyond the borrower’s control.

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Marginal note:High ratio loans

• 5 (1) A high ratio loan must meet the following criteria:

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  • (e) if the loan agreement allows for fluctuations in the amortization period as a result of a variable rate of interest during the term of the loan, the loan payment must be recalculated at least once every five years to conform to the original amortization schedule;

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  • (j) at the time the loan is approved, it must be reasonably likely to be repaid, having regard to the borrower’s capacity to make the loan payments while paying their other debts and meeting their other obligations over the term of the loan, based on reasonable assumptions as to what the highest loan payment over the term of the loan will be; and

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• (3) For the purposes of paragraph (1)(h), the gross debt service ratio and total debt service ratio are to be calculated using the annual payments, in respect of the loan and any other loan with an equal or prior claim against the eligible residential property, that would be required to conform to the amortization schedule agreed to by the borrower and the lender if the interest rate were the greater of

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  • (b) the five-year conventional mortgage interest rate, as determined weekly by the Bank of Canada, that was in effect on the Monday of the week in which the calculation is performed.

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Marginal note:Eligibility

• 3 (1) Subject to subsections (4) and (5), to be an eligible mortgage loan, a mortgage or hypothecary loan must meet the criteria set out in section 4 and, as applicable, section 5 or 6.

• Marginal note:Replacement of security and increased balance

  (2) For greater certainty, if an insured mortgage or hypothecary loan is modified to both replace its security with a new eligible residential property and increase its outstanding balance, the increased portion is to be considered, for the purposes of these Regulations, as a new loan approved on the day on which the increase is approved, which must meet the criteria that apply on that day to be an eligible mortgage loan.

• Marginal note:Other modifications

  (3) If any other modification is made to an insured mortgage or hypothecary loan that requires the payment of an additional mortgage or hypothecary insurance premium, the loan is to be considered, for the purposes of these Regulations, as a new loan approved on the day on which the modification is approved, which must meet the criteria that apply on that day to be an eligible mortgage loan. Any modification that does not require the payment of an additional mortgage or hypothecary insurance premium does not affect the eligibility of the loan.

Marginal note:High ratio loans — before October 15, 2008

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• (5) The criteria set out in paragraphs 5(1)(a), (b), (c), (d) and (h) do not apply to a high ratio loan if

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  • (b) during the period beginning on June 22, 2012 and ending on July 8, 2012, the mortgage insurer received a mortgage or hypothecary insurance application in respect of the loan and the loan is funded not later than

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    • (ii) June 30, 2013, if it is documented as being scheduled to be funded not later than December 31, 2012 but is delayed due to unforeseen circumstances beyond the borrower’s control.

• (6) The criterion set out in paragraph 5(1)(a) does not apply to a high ratio loan if, at the time the loan is approved, its principal amount, together with the outstanding balance of any loan having an equal or prior claim against the eligible residential property against which it is secured, is less than or equal to 95% of the value of the eligible residential property and

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  • (c) during the period beginning on December 11, 2015 and ending on February 14, 2016, the mortgage insurer received a mortgage or hypothecary insurance application in respect of the loan and the loan is funded not later than

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    • (ii) December 31, 2016, if it is documented as being scheduled to be funded not later than July 1, 2016 but is delayed due to unforeseen circumstances beyond the borrower’s control.

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