The client
A borrower near Melfort, Saskatchewan, whose private lender holds a single inter alia (blanket) mortgage of $180,000 secured against both a $340,000 family home and a $165,000 rental property, wanting to refinance the home out to an institutional lender while the rental stays with the private lender for now.
Property A (home)
Appraised at $340,000
Being refinanced out to an institutional lender
Property B (rental)
Appraised at $165,000
Staying with the private lender for now
Blanket balance
$180,000
Secured against both properties as one charge
Income
$8,200/month combined
Used to qualify the home's new mortgage
The blocker
No pre-agreed split of the blanket charge
either property alone could not discharge on its own
The problem
A blanket mortgage is registered against two titles as one debt, not as two debts that happen to share a lender. Discharging one property while leaving the other encumbered is not something either side can do unilaterally — the private lender has to agree to a specific dollar amount allocated to each title before a partial discharge can register.
The two properties behind the one charge
- ▸Property A (the home): appraised at $340,000
- ▸Property B (the rental): appraised at $165,000
- ▸Combined security value: $505,000, against a single $180,000 blanket balance
Every private lender sets its own method for splitting a blanket charge when only one property is exiting; without an agreed method, the file simply cannot move — and that agreement matters just as much for exit planning as anything covered in how private lenders assess equity in the first place.
The numbers
The private lender proposed splitting the $180,000 blanket balance by each property's share of the combined $505,000 appraised value — one defensible method among several a private lender operating in this segment of the mortgage market by lender type might use.
| Apportioning the blanket balance by relative value | Amount |
|---|---|
| Combined appraised value (both properties) | $505,000 |
| Property A's share of the combined value | 67.3% |
| Property B's share of the combined value | 32.7% |
| Blanket balance allocated to Property A | $121,140 |
| Blanket balance remaining on Property B alone | $58,860 |
| Property A's new mortgage | Figure |
|---|---|
| Allocated payout | $121,140 |
| Discharge and legal costs | $2,500 |
| New institutional mortgage | $123,640 |
At 36.4% loan-to-value on the $340,000 home, qualifying payment at 7.15% (5.15% contract + 2%) comes to $877/mo, for TDS of 19.7% against the $8,200/mo household income — well inside any lender's comfort range, since the home carries only its own $123,640 share going forward.
The solution
A mortgage brokerage working the exit treated the apportionment agreement, not the new mortgage application, as the file's real work.
First, got the private lender to confirm the apportionment method in writing before ordering appraisals. Relative appraised value was the method this private lender used; another might have split by original advance use or by a fixed percentage — getting it in writing avoided a dispute after the numbers were already set.
Second, ordered independent appraisals on both properties, not just the one exiting. The $340,000 and $165,000 figures both needed to be current and defensible, since the split depended on both.
Third, had the private lender register a formal partial discharge against Property A's title only, with the apportionment agreement itself kept on file — not an informal understanding that either side could later dispute.
The outcome
Property A refinanced out cleanly at $123,640, 36.4% loan-to-value, with TDS at 19.7%. Property B continued under the private lender carrying its own $58,860 share of the original balance, fully documented and separate from the home going forward.
Because this file is an uninsured refinance, there is no CMHC ratio ceiling on either property; the numbers reflect the new institutional lender's own underwriting, not a regulatory maximum.
What to take from this file
- 01A blanket mortgage is one debt across two titles, not two separate debts. Neither property can discharge alone without the lender's agreement on how to split the balance.
- 02Get the apportionment method confirmed in writing before ordering appraisals. Relative value is common, but it is a private lender's choice, not a fixed rule.
- 03Both properties need current, independent appraisals. The split depends on both figures being defensible, not just the one that's exiting.
- 04A formal partial discharge protects both sides. An informal understanding about who owes what leaves room for a dispute neither side wants later.
- 05Plan the exit strategy for a blanket mortgage before it's needed, not after. Knowing the apportionment method in advance turns a multi-week negotiation into a documentation exercise.
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%.
- ▸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:
- ▸5.15% contract rate — rates move daily; not a quote.
- ▸splitting the blanket balance by relative appraised value — each private lender sets its own basis for apportioning a blanket charge across multiple properties — value is one common method, not the only one.
- ▸$2,500 discharge and legal costs — an illustrative estimate; actual legal and discharge fees vary by file and by law firm.
- ▸the TDS figure — this file is an uninsured refinance, so there is no CMHC ratio ceiling.
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.