The client
An Ontario household selling a home carrying a $58,000 private second (at 9.75%, interest-only) planned to close that sale the same day as a new $505,000 purchase in Kawartha Lakes.
Private second on departing home
$58,000
9.75%, interest-only, retired by the sale
New purchase price
$505,000, Kawartha Lakes
Down payment from sale proceeds
$135,000
Combined income
$9,600/month
The problem
The sale was the source of both the down payment on the new purchase and the funds to retire the private second -- and it was scheduled to close the same day as the purchase itself, under its own firm Agreement of Purchase and Sale. The purchase's own closing date did not move just because the sale might be tight.
Where the one day actually went
- ▸The sale-side buyer's own lender wired its funds after the land registry's daily cut-off for that day
- ▸With the cut-off already passed, the sale itself settled -- and released its proceeds -- one business day later than planned
- ▸The new purchase, on its own firm date, still needed to close regardless of what happened on the sale side
Two closings, one calendar, and only one of them actually had any room to move.
The numbers
A short bridge loan against the pending sale proceeds is what let the purchase close exactly on schedule.
| One overnight gap, priced | Amount |
|---|---|
| Down payment needed from sale proceeds | $135,000 |
| Bridge loan, overnight | $135,000 at 7.95% |
| Bridge-loan interest, one day | $30 |
| New purchase mortgage | Figure |
|---|---|
| Purchase price | $505,000 |
| New mortgage (after the $135,000 down payment) | $370,000 |
| Qualifying payment at the minimum qualifying rate (6.90%), 25 years | $2,569/mo |
| Total debt service | 34.3% |
34.3% is unaffected by the one-day bridge entirely -- consistent with how mortgage arrears data shows a short, planned bridge like this one carries none of the risk of an actual missed payment. The $30 bridge cost is the whole price of the one-day gap.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the sale's own settlement risk as something to plan a contingency for, not something the purchase's closing date could simply absorb if it went wrong.
First, arranged a short overnight bridge loan against the pending sale proceeds well before the closing date, as a contingency, the moment the sale-side closing showed any risk of slipping at all.
Second, funded the purchase on its own firm date using the bridge, so it never actually depended on the sale landing that same day.
Third, discharged the private second and repaid the bridge the next business day, once the sale's own proceeds actually arrived.
The outcome
The purchase closed on schedule at 4.90%, the sale (and the private second's discharge) settled the next business day, and total debt service on the new mortgage came to 34.3%.
Because this is an uninsured purchase, CMHC's ratio maximums do not apply directly; the 34.3% figure is informational.
What to take from this file
- 01A firm purchase closing date does not move just because a related sale might slip. Plan a contingency for the sale side, not a hope that both dates align.
- 02A short overnight bridge loan is often the cheapest insurance against a one-day settlement gap. The interest cost here was a fraction of what missing the firm date would have cost.
- 03A sale can settle late for reasons that have nothing to do with the seller -- like the buyer's own lender's wire timing. That risk sits on the sale side regardless of whose fault it is.
- 04Arrange bridge financing before the risk materializes, not after. A contingency lined up in advance closes on schedule; one arranged in a panic often does not.
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:
- ▸9.75% / 7.95% / 4.90% rates — rates move daily; none is a quote.
- ▸the one-day bridge-financing cost — illustrative; each lender prices short-term bridge financing on its own terms, often with a minimum flat fee on top of per-diem interest.
- ▸the total-debt-service figure — this is an uninsured purchase -- 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.