The client
The remaining spouse refinancing a $195,000 mortgage in Moose Jaw, Saskatchewan to fund a $72,000 equalization payment to the departing spouse, on their own income.
Remaining spouse
Single income, $5,700/month
Keeping the home after separation
Existing mortgage
$195,000 balance
Being refinanced to fund the equalization payment
Equalization payment
$72,000, per the separation agreement
Increases the mortgage balance to $267,000
Other debt
$310/mo car loan
unchanged by the refinance
The problem
The file was first priced at the new lender's 4.89% contract rate alone, on the assumption that OSFI's minimum qualifying rate didn't apply — treating this as if it qualified for the Nov 21, 2024 exemption that lets an uninsured straight switch skip the stress test. It doesn't qualify: that exemption requires no increase in the loan amount, and this refinance increases the balance by $72,000 to fund the equalization payment. Increasing the balance is one of the two conditions that voids the exemption outright.
Why the exemption doesn't apply here
- ▸The exemption requires no increase in the loan amount and no extension of the amortization
- ▸This refinance increases the balance from $195,000 to $267,000 to fund the equalization payment
- ▸One broken condition is enough — the file must be stress-tested at the full minimum qualifying rate
At the contract rate alone, TDS looked comfortable at 39.1% — comfortable enough that the mistake could easily have gone unnoticed until underwriting caught it, or worse, until it didn't.
The numbers
Two very different numbers came from the same $267,000 balance, depending on which rate qualified it — a gap the mortgage stress test's own qualifying-rate history shows can move a file by several points at a time.
| The refinance, priced two ways | Amount |
|---|---|
| Existing mortgage balance | $195,000 |
| Equalization payment funded through the refinance | +$72,000 |
| New mortgage balance | $267,000 |
| Contract rate | 4.89% |
| Minimum qualifying rate (greater of contract + 2% or 5.25%) | 6.89% |
| TDS at the $267,000 balance | At 4.89% (mistaken basis) | At 6.89% MQR, 25 years (correct basis) |
|---|---|---|
| Payment | $1,536 | $1,852 |
| Tax and heat | $380 | $380 |
| Car loan | $310 | $310 |
| Total debt service | 39.1% | 44.6% ✗ |
This file is an uninsured refinance, so there is no CMHC ratio ceiling — but the new lender applies a similar 44% comfort line before it will fund. 44.6%, correctly stress-tested at 25 years, cleared that line by enough to matter.
The fix: a 30-year uninsured amortization
Extending the amortization to 30 years — available here specifically because this refinance was never eligible for default insurance in the first place, so none of CMHC's amortization eligibility conditions apply — dropped the qualifying payment and brought TDS back under the lender's own ceiling.
| At 6.89% MQR, 30 years | Figure |
|---|---|
| Payment | $1,739 |
| Total debt service | 42.6% ✓ |
The solution
A Saskatchewan mortgage broker, licensed under the province's Mortgage Brokerages and Mortgage Administrators Act, corrected the file before it reached the lender's underwriter.
First, confirmed the exemption's two conditions against this specific file. No increase in loan amount, no extension of amortization — funding the equalization payment broke the first condition immediately, regardless of anything else about the file.
Second, re-ran the file at the full minimum qualifying rate rather than the contract rate the initial pricing had assumed, surfacing the 44.6% figure before submission rather than after a conditional approval fell through.
Third, extended the amortization to 30 years, a straightforward fix available precisely because this is an uninsured refinance with none of the first-time-buyer or new-build conditions that govern a 30-year insured amortization.
The outcome
The refinance funded uninsured at $267,000, correctly stress-tested at 6.89%, with TDS settling at 42.6% on the 30-year amortization. The equalization payment closed on schedule, and the file was never at risk of being approved on a rate it wasn't actually entitled to use.
Saskatchewan levies no land transfer tax; the province's own land-titles registration fees apply at closing but are not quoted here since the current fee schedule could not be independently verified.
What to take from this file
- 01The straight-switch MQR exemption has two hard conditions, and either one breaks it. No increase in the loan amount, no extension of the amortization — funding an equalization payment almost always breaks the first.
- 02Check the exemption against the specific file, not the general idea of a switch. This refinance moved to a new lender at renewal, which looks like a switch on the surface, but the increased balance disqualifies it.
- 03A comfortable contract-rate number means nothing if the wrong rate qualified it. 39.1% and 44.6% were the same $267,000 balance.
- 04An uninsured refinance opens amortization options an insured file doesn't have. The 30-year term here needed no first-time-buyer or new-build condition, because it was never eligible for insurance to begin with.
- 05Uninsured doesn't mean uncapped. This lender's own 44% comfort ceiling still governed the file, even without a CMHC rule behind it.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸OSFI — OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits — MQR exemption for uninsured straight switches at renewal (from Nov 21, 2024).
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸4.89% contract rate — rates move daily; not a quote.
- ▸$260/mo tax and $120/mo heat estimate — lender-standard estimates, not rules.
- ▸the 44% comfort reference — this file is uninsured; 44% is the new lender's own internal ceiling, not a regulatory cap.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.