The client
A homeowner in Guelph switching lenders at renewal, no top-up and no change in amortization — on paper, a routine straight switch. The competing lender’s 5.19% offer beat the existing lender’s renewal letter by a full point, and the file’s own numbers were never in question.
Borrowers
Salaried couple, both T4
Combined income $9,800/month
Existing mortgage
$410,000 balance
22 years remaining amortization
New lender’s offer
5.19% 5-year fixed
A full point below the existing lender’s renewal letter
Other debt
$200/mo car loan
Only fixed obligation on the file
Property costs
$310/mo tax, $140/mo heat
Lender-standard estimates
The problem
The switch lawyer’s title search came back clean — no liens, no competing charges, nothing that would have stopped the new mortgage from registering in first position. Before June 2024, that clean result would have meant something specific: a financed or rented furnace, water heater, or similar consumer good showed up on an Ontario title search as a registered Notice of Security Interest (NOSI), so a clean search was itself evidence nothing like that existed.
That assumption stopped being true on June 5, 2024. Ontario’s Homeowner Protection Act, 2024 banned registering new NOSIs for consumer goods on the land registry outright, and retroactively cancelled every one already registered against title. The rental agreements themselves did not disappear — only their visibility on title did. A lawyer or broker who still reads a clean title search as proof there is nothing rented in the house is applying a rule that the legislature deliberately took away.
What the clean title search did not show
- ▸A financed furnace, installed under a multi-year rental agreement, with no trace of it left on title at all
- ▸A dedicated PPSA registry search, run separately from the title search on this switch, turned up an active agreement with four years still remaining
- ▸Buyout quote from the rental company to end the agreement and clear it before funding: $2,800
Nothing about this was the outgoing lender’s fault, and nothing about it was hidden on purpose — the rental was fully disclosed when the mortgage was first taken out. A same-lender renewal would never have revisited it. A switch’s fresh legal work is exactly the moment an old habit (trust the title search) meets a law that changed what a title search can show.
The numbers
The switch itself priced out cleanly once the rate was tested at the qualifying rate, not the contract rate.
| The switch, before the PPSA search | Amount |
|---|---|
| Existing mortgage balance at renewal | $410,000 |
| Remaining amortization | 22 years |
| New lender’s contract rate | 5.19% |
| Furnace-rental buyout, paid separately at closing | $2,800 |
| Rate & payments | Figure |
|---|---|
| New lender’s contract rate — 5-year fixed (illustrative, not a quote) | 5.19% |
| Minimum qualifying rate — greater of contract + 2% and 5.25% | 7.19% |
| Monthly payment at the qualifying rate — the ratios run on this | $3,069 |
| Monthly payment at the contract rate — what they would actually pay | $2,595 |
| Gap between the qualifying-rate payment and the real payment | $474 |
GDS and TDS at the qualifying rate
| Ratio | Monthly | Result |
|---|---|---|
| Housing costs: payment $3,069 + tax $310 + heat $140 | $3,519 | — |
| GDS: $3,519 ÷ $9,800 income | — | 35.9% |
| Add the $200 car loan | $3,719 | — |
| TDS: $3,719 ÷ $9,800 income | — | 37.9% |
As an uninsured file, the 39%/44% figures above are this lender’s own internal benchmark, mirroring but not identical to CMHC’s insured maximums. The ratios were never the obstacle here — the furnace rental, invisible on the very search meant to catch it, was.
The solution
An FSRA-licensed Ontario mortgage agent treated the clean title search as a starting point, not a finish line.
First, confirmed the file’s own numbers cleared with room to spare — the qualifying-rate math above — so the switch itself was never in doubt.
Second, ordered a standalone PPSA registry search rather than relying on the title search alone, specifically because the 2024 law change means a clean title result no longer rules out a rented furnace, water heater, or similar item. That search is what actually surfaced the agreement.
Third, negotiated the buyout directly with the rental company and had it paid at closing, in cash, kept separate from the new mortgage — so a vendor-set figure did not get amortized into 22 years of interest along with everything else.
The outcome
Approved and funded on the new lender’s 5.19% offer, the furnace-rental agreement bought out for $2,800 and paid directly by the borrowers, and the new mortgage registered against a title genuinely clear of any competing interest.
As a switch, not a purchase, no land transfer tax applied to this file at all — the only costs were the buyout itself and the new lender’s standard discharge and registration fees.
What to take from this file
- 01Since June 2024, a title search alone cannot show a financed or rented furnace, water heater, or similar consumer good in Ontario. The registration was taken off title entirely, not just made harder to find.
- 02A dedicated PPSA registry search is now the only reliable way to catch an active rental agreement on a switch file. Do not treat a clean title search as proof of a clean file.
- 03A same-lender renewal never repeats this discovery step. A switch’s fresh legal work is exactly where an old assumption about what title shows stops being true.
- 04Price the buyout and keep it separate from the mortgage where possible. A vendor-set figure amortized over 22 years costs far more than paying it once, in cash, at closing.
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%.
- ▸CMHC — CMHC Reviews Underwriting Criteria — GDS 39% / TDS 44% maximums and the 600 credit-score floor for insured files.
- ▸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:
- ▸5.19% new-lender contract rate — rates move daily; not a quote.
- ▸$2,800 furnace-rental buyout — set by the rental company, not regulated.
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.