The client
A household in Greater Sudbury carried a $268,000 mortgage maturing while one borrower, having changed employers shortly before renewal, was three months into the new job's own probationary period.
Mortgage balance at maturity
$268,000
21 years remaining
Borrower's new job
3 months into probation
Changed employers shortly before maturity
Combined income
$7,100/month
Includes the new job's full salary
Other debt
$235/mo car loan
The problem
A straight switch that leaves the loan amount and amortization unchanged is exempt, by OSFI's own 2024 policy, from the minimum qualifying rate at renewal. What that exemption does not do is answer whether a lender will accept the borrower's income at all while a new job's probationary period is still running.
Two different questions, one exemption
- ▸The straight-switch exemption governs which RATE the file qualifies at -- it says nothing about whether the income itself will be accepted
- ▸One lender's own policy blanket-declines any switch applicant currently on probation, exemption or not
- ▸The borrower's actual income had not changed in substance -- only the calendar status of the new job had
The switch itself was never going to trigger a fresh stress test. Whether a lender would look past the word 'probation' was a separate question entirely.
The numbers
Once the file moved to a lender that qualified it on the contract-rate payment the exemption allows, the arithmetic itself was straightforward.
| The switch, at the accepting lender's rate | Amount |
|---|---|
| Mortgage balance at maturity | $268,000 |
| Total debt service | Figure |
|---|---|
| Payment at the switch lender's contract rate (4.69%), 21 years | $1,667/mo |
| Property tax | $305/mo |
| Heat (lender estimate) | $120/mo |
| Car loan | $235/mo |
| Total debt service | 32.8% |
32.8% is comfortably inside range for an uninsured switch -- once a lender actually priced the contract-rate payment the exemption allows, rather than declining on the word 'probation' alone, consistent with how rarely a genuine stress-test history change is really the obstacle at renewal.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the straight-switch exemption and the income-verification question as two separate problems, not one.
First, confirmed the exemption still applied. Because the loan amount and remaining amortization were both unchanged, the file qualified for OSFI's straight-switch exemption regardless of the employment change.
Second, obtained a written employer letter confirming the new position was permanent and full-time from the outset, with no condition on compensation or continued employment beyond the standard probationary period itself.
Third, moved the switch to a lender whose own policy reads a documented permanent offer -- not the calendar status of 'currently on probation' -- as the real test of income continuity.
The outcome
The switch closed at 4.69%, with total debt service settling at 32.8%, once the second lender's policy read the actual employment offer rather than the probationary label alone.
Because this file is an uninsured straight switch, CMHC's ratio maximums do not apply directly; 32.8% is informational, showing the file was never close to a real ceiling once correctly qualified.
What to take from this file
- 01A straight-switch exemption governs the stress-test rate only. It says nothing about whether a lender will accept the borrower's income while a probationary period is running -- that is a separate, lender-specific policy question.
- 02Each lender sets its own policy for a switch applicant currently on probation. A blanket decline at one lender is not evidence the file itself is unqualifiable.
- 03A written employer letter confirming permanent, full-time terms is what actually answers the income-continuity question -- not the exemption, and not the calendar.
- 04Ask which lenders read a documented permanent offer as sufficient before assuming a probationary period will delay a switch that otherwise qualifies cleanly.
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.
- ▸OSFI — OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits — MQR exemption for uninsured straight switches at renewal (from Nov 21, 2024).
Illustrative in this file — lender-specific, not rules:
- ▸4.69% switch rate — rates move daily; not a quote.
- ▸the first lender's blanket probation decline — each lender sets its own policy for a switch applicant currently on probation; the exemption governs the stress-test rate only, not income-verification policy, which is not a published rule.
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.