The client
A homeowner in Rivière-du-Loup holds a $312,000 mortgage, insured through CMHC at purchase, reaching renewal for a straight switch at 4.60% versus 5.30% to stay — no increase in balance, no change to the remaining amortization.
Mortgage balance at renewal
$312,000
Rivière-du-Loup, insured through CMHC at purchase
Current property value
$445,000
LTV now roughly 70%, well below the original insured band
What a first lender's system generated
$5,304 in new default-insurance premium
Recalculated as though this were a fresh purchase
Rates on offer
5.30% stay · 4.60% switch
Neither is a quote
The problem
Porting an already CMHC-insured mortgage to a new lender, with no increase in the loan amount and no extension of the remaining amortization, doesn't re-trigger the default-insurance premium at all — the existing policy simply continues under the new lender. The first lender's own intake system, built around new-purchase underwriting, ran this file through the standard mortgage default insurance premium schedule anyway, reading the current balance and value as though no insurance had ever been placed.
Why the system's own number was wrong
- ▸This file's loan-to-value today, recalculated from the current balance and value, happened to fall in the schedule's 65.01-75% band -- a real band, applied to the wrong situation
- ▸A straight port or switch of an already-insured mortgage carries the SAME policy forward; it is not a new insurance application
- ▸The system had no field distinguishing 'already insured, porting' from 'new purchase, needs insurance' -- it defaulted to the latter
Nobody disputed the loan-to-value math itself. The error was applying a purchase-insurance calculation to a file that was never buying insurance in the first place.
The numbers
Once the erroneous premium was cleared, sizing the switch itself was routine.
| The switch, once the erroneous premium was withdrawn | Amount |
|---|---|
| Mortgage balance | $312,000 |
| Erroneous premium the first lender's system generated | $5,304 |
| Actual premium owed on this straight switch | $0 |
| Total debt service | Staying | Switching |
|---|---|---|
| Mortgage payment | $2,045 | $1,926 |
| Property tax and heat | $405 | $405 |
| Car loan | $230 | $230 |
| Total debt service ÷ $7,400 income | 36.2% | 34.6% |
Both figures sit comfortably inside CMHC's 44% TDS maximum for this insured file, well within the range stress-tested renewal rates typically produce for a straight switch -- the ratios were never the issue here; the phantom $5,304 premium was.
The solution
A courtier hypothécaire licensed under Quebec's AMF treated the premium recalculation as a system-classification error, not a real charge to negotiate down.
First, confirmed the existing CMHC insurance policy was still active and attached to the mortgage. The original purchase documents showed the premium had already been paid, once, years earlier.
Second, confirmed with the first lender that the loan amount and remaining amortization were both unchanged. A straight port on those terms carries the existing policy forward automatically.
Third, escalated to have the erroneous $5,304 charge removed from the commitment before it could be signed, rather than paying it and requesting a refund from the insurer afterward.
The outcome
The switch closed at 4.60% with the erroneous $5,304 premium removed before signing, and total debt service settled at 34.6%, comfortably inside CMHC's 44% maximum.
How a specific lender's intake system flags an already-insured port is a software design question, not an insurer rule — the $5,304 figure here reflects what this one system generated, not a charge any straight switch should expect to see.
What to take from this file
- 01Porting an already-insured mortgage with no increase doesn't re-trigger the premium. The existing policy simply continues; it isn't a new insurance application.
- 02A recalculated premium that happens to land in a real LTV band can still be entirely wrong. The band was correct; applying it to this situation at all was not.
- 03Confirm the loan amount and amortization are unchanged before accepting any new premium figure. That single fact is what should have stopped the recalculation from running at all.
- 04Get an erroneous charge removed before signing, not refunded after. Disputing a paid premium with an insurer afterward costs far more time than catching it at commitment.
- 05This wasn't a ratio problem. TDS cleared comfortably under either rate — the entire issue was a $5,304 charge that was never actually owed.
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.
- ▸CMHC — Purchase (Mortgage Loan Insurance) — default-insurance premium schedule by LTV band (25-year amortization).
- ▸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:
- ▸5.30% / 4.60% rates — rates move daily; neither is a quote.
- ▸how a specific lender's intake system flags an already-insured port — this reflects one system's own workflow design, not an insurer rule; not every system would generate the same error.
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.