Bundled Loans vs. Mortgage Rules

Bundled loans are giving the new federal mortgage rules a run for their money. On October 17th, 2016, Canada released its new federal mortgage rules. These rules were created to help regulate loans and protect the Canadian economy. For a refresher click on the following link,

Canada’s subprime mortgage providers are now offering borrowers an option. This option allows borrowers to avoid the regulations set by the federal mortgage rules.

Subprime mortgage providers have joined forces with Mortgage Investment Corporations (MICs). This relationship created a product called a bundled loan. Bundled loans pair a primary mortgage with a second loan from a MIC.

Bundled Loans

Mortgage Investment Corporations are usually financed by wealthy individuals who look for a high return on their investment. MICs offer individuals with good credit ratings five-year rates that are fixed at 3 percent. Individuals with bad credit ratings are offered fixed rates of 7 to 10 percent.

Because of the new federal mortgage rules, bundled loans have become popular amongst Canadians. The reason for the popularity is due to the bundled loans ability to go around the new federal mortgage rules.

Government regulations restrict lenders from offering loans that amount to more than 65 percent of the value of a house. Loans that are more than 80 percent of the property’s value are also not allowed. A “bundled” loan can allow an individual to take on a mortgage by placing a 10 percent down payment and without government insurance.


Bundled loans might appear to be a saviour, but there is a dark side to them. Home owners across North America have claimed that bundling provides a distraction from hidden costs. With multiple lenders on one loan, fees can become difficult to track.

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