Over 15% of loans are for already mortgaged homes


by Ephraim Vecina

22 Aug 2018


With homes nationwide seeing sustained price increases over the past few years, Canadian home owners continuously strapped for cash have been forced to become creative in their financial management – and an increasingly popular method is taking out a loan for an already mortgaged home.

Data from the CMHC indicated that multiple mortgages on the same property accounted for 15.12% of originations in 2017. The market share of multiple mortgages increased by 4.16% annually from 2016.

In particular, Toronto has seen a significant upward spike in multiple mortgages, with 17.4% of originations in the city last year going to already mortgaged properties. This represented a 2.6% increase from the year prior, Better Dwelling reported.

Montreal was the second largest market of multiple mortgages last year, according to the CMHC. Increasing by 4% from 2016, multiple loans on the same property comprised 17.4% of new mortgages in the city last year, a similar proportion to that of Toronto.

Meanwhile, Vancouver – although the third largest market for this type of mortgage in Canada – actually saw the number of loans on already mortgaged homes fall by 7% from 2016, representing 18.1% of new mortgages in 2017.

Read more: Why were so many borrowers renewing with the same lender last year?

Paying off these debts and other products such as payday loans is expected to become a significant hurdle for Canadian borrowers in the near future, the CMHC stated in a separate report earlier this month.

Monthly housing payments have steadily increased amid rising interest rates and the larger debt loads accumulated during the past few years of record-low rates. The Crown corporation also warned that this might be just the beginning as interest rate growth is now normalizing.