The client
A homeowner in Rimouski carrying a $210,000 first mortgage and a maturing $61,000 private hypothec, with an accepted promise to purchase meant to fund the payout.
First mortgage balance
$210,000
4.65%, 19 years remaining
Private hypothec balance
$61,000
9.25% interest-only, maturing
Combined income
$7,100/month
Other debt
$225/mo car loan
The problem
Before the notarial deed, the original buyer assigned their promise to purchase to a numbered company they controlled -- a step the promise's own terms permitted. What the assignment did not do was carry the original buyer's own mortgage approval along with it.
What changed the moment the promise was assigned
- ▸The original individual buyer had their own financing lined up and progressing normally
- ▸The numbered company assignee is a legally distinct buyer, requiring its own separate mortgage approval from scratch
- ▸The homeowner's private hypothec was still maturing on its original schedule, regardless of who the eventual buyer turned out to be
Nothing about the sale price or the terms had changed. Only who was actually going to sign at the notary's office had, and that alone reset the financing clock.
The numbers
With the sale itself intact and only the closing delayed, the only real cost to price out was what a short extension on the maturing private hypothec would actually run.
| The cost of the extension | Amount |
|---|---|
| Private hypothec, interest-only at 9.25% | $470/mo |
| One-time flat extension fee (1% of balance) | $610 |
| Total debt service during the extension | Figure |
|---|---|
| First mortgage payment | $1,384/mo |
| Property tax + heat | $380/mo |
| Car loan | $225/mo |
| Private hypothec, interest-only | $470/mo |
| Total debt service | 34.6% |
34.6% is informational on this uninsured file. The real number in this case is not a ratio at all -- it is the single $610 flat fee that was the entire price of keeping the note in place while the assignee's own financing caught up.
The solution
A courtier hypothecaire licensed under Quebec's Act respecting the distribution of financial products and services confirmed the assignment's legal footing before treating the delay as anything other than routine.
First, confirmed the assignment's validity directly against the promise to purchase's own clause permitting it, rather than assuming a change in buyer was itself a problem.
Second, obtained the private lender's agreement to a flat, one-time extension fee rather than a rate increase, keeping the ongoing carrying cost of the maturing note unchanged.
Third, had the notary confirm in writing exactly what documentation the assignment required before the new corporate buyer's own closing was allowed to proceed.
The outcome
The private hypothec was paid out once the assignee's own financing closed, with total debt service at 34.6% during the extension period on the existing first mortgage alone.
Because this file is uninsured, the TDS figure is informational; the fee, not the rate, was the entire cost of the delay.
What to take from this file
- 01An assignment of a promise to purchase does not carry the original buyer's own financing along with it. A new legal buyer needs its own separate mortgage approval, however unchanged the price and terms.
- 02Check the promise to purchase's own clause on assignment before treating a change in buyer as a problem. Many are drafted to permit it.
- 03A one-time flat extension fee is a different, and sometimes cheaper, accommodation than a rate increase. Ask the private lender for both options before assuming which one applies.
- 04A sale that is otherwise intact does not need a bridge loan just because the closing date moved. A short, priced extension on the existing note is often the simpler answer.
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:
- ▸9.25% rate — rates move daily; not a quote.
- ▸the 1% flat extension fee — one private lender's own accommodation; each private lender sets its own terms for a short extension.
- ▸the TDS figure — this file is uninsured, so there is no CMHC ratio ceiling -- the number is informational.
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.