The client
A household in Ingersoll carried a $236,000 first mortgage and a $56,000 private second, with the second's term maturing.
First mortgage balance
$236,000
4.65%, 19 years remaining
Private second balance
$56,000
9.25% interest-only
Combined income
$7,600/month
Other debt
$225/mo car loan
The problem
The private lender issued a signed one-year renewal commitment and charged its usual $2,200 fee to reserve that rate and hold the funds for the new term. Before the term actually started, the household qualified to consolidate both mortgages into one new A-lender mortgage instead.
The question the household asked
- ▸The private renewal commitment was signed and the $2,200 fee was paid, but the new term had not started yet
- ▸The household changed course toward an A-lender consolidation before a single payment was ever made under the private renewal
- ▸If the private renewal itself was never used, did the $2,200 fee have to come back?
Nobody had done anything wrong. The commitment simply became unnecessary before it ever took effect -- and that is a different question from whether its fee was refundable, a distinction the corpus's own commitment fee entry draws directly.
The numbers
Consolidating the first and the second into one new A-lender mortgage was the easy part of this file, and it lands well inside the pattern Canadian mortgage renewal statistics show for a household moving off a private second; the fee question was the actual work.
| Consolidating the first and the second | Amount |
|---|---|
| First mortgage balance | $236,000 |
| Private second balance | $56,000 |
| New consolidated balance | $292,000 |
| Total debt service | Before (both mortgages) | After (consolidated) |
|---|---|---|
| Mortgage payment | $1,555 | $2,009 |
| Property tax + heat | $410 | $410 |
| Private second, interest-only | $432 | -- |
| Car loan | $225 | $225 |
| Total debt service | 34.5% | 34.8% |
34.5% moving to 34.8% is a rounding error next to the actual dispute in this file: whether a $2,200 fee, paid for a commitment that was never drawn on, comes back.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act read the private lender's own commitment letter rather than assuming the fee tracked completion.
First, located the commitment letter's own fee clause. It stated plainly that the commitment fee compensated the lender for issuing the commitment and reserving both the rate and the funds for the full term -- earned the moment the commitment was signed, not on funding.
Second, confirmed this was standard practice for this private lender, not a one-off penalty. A commitment fee that survives a borrower's change of plans is common in private lending precisely because the lender has already set money and a rate aside.
Third, proceeded with the A-lender consolidation with the fee treated as a sunk cost. Re-litigating a properly disclosed, contractually earned fee would only have delayed a consolidation that was already the better outcome for the household.
The outcome
The consolidation funded at 4.80% and 34.8% total debt service, with the private lender's $2,200 fee confirmed non-refundable and correctly excluded from the new mortgage's own costing.
Because this file is an uninsured consolidation, CMHC's ratio maximums do not apply directly; the 34.5% and 34.8% figures are informational, showing exactly what the consolidation itself changed.
What to take from this file
- 01A private commitment fee is typically earned on issuance, not on completion. Read the commitment letter's own wording before assuming a fee tracks whether the loan actually funds.
- 02A borrower changing course does not, by itself, make an already-earned fee refundable. The lender reserved funds and a rate the moment the commitment was signed.
- 03Confirm a private lender's fee-earning terms before recommending a renewal commitment be signed. Setting expectations up front avoids a dispute that the paperwork already answers.
- 04A consolidation can still be the right move even with a sunk fee attached. Don't let a properly earned $2,200 fee delay a decision that saves far more than that.
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:
- ▸4.65% / 9.25% / 4.80% rates — rates move daily; none is a quote.
- ▸the $2,200 commitment fee — each private lender sets its own commitment-fee amount and terms; there is no published or universal figure.
- ▸the TDS figures — this is an uninsured consolidation -- there is no CMHC ratio ceiling; the numbers are 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.