July 2008

As of July I will no longer be updating this assumable page.  Tightening lending conditions have resulted in many banks no longer allowing assumable with no qualifying. Lenders that do "allow" them have changed their position mid-buying process even if they had confirmed assumability earlier.

This can cause a lot of turmoil to buyers.  Consider this scenario:  The bank had previously "confirmed" assumability of the mortgage.  Buyer waives their Financing Condition and the sale is firm.   As possession date approaches, the bank reneges and will not transfer the mortgage to the new buyer.  Since the buyer has already waived their Financing Condition this may mean the buyer has also just lost their Initial Deposit.  It can seem arbitrary, but it can occur as each mortgage assumption really is on a case by case basis.

Many assumable with no qualifying out there are now private lenders that have high interest rates, or with VTB (vendor take-back) clauses, or other clauses that force buyers to refinance within a certain time period or risk losing their property.

Before you sign any purchase contract with an assumable mortgage, have your Real Estate Lawyer carefully review, explain, and approve any clauses or conditions with you.

Investors Alert (March 2008): Effective immediately, RBC no longer allows Assumable with No Qualifying mortgages.  Clients assuming mortgages must now qualify to do so.

How much do you know about assumable mortgages? Take the quiz to find out!   Highlight the empty space below the question to view the answer. No cheating ;)

(Note: All information is based on assumable mortgages in the Province of Alberta. Other provinces have different laws, regulations, & guidelines)

Question # 1 : All mortgages are assumable in Alberta.

Answer: False. The old presumption that all "ordinary" mortgages are automatically assumable in Alberta is no longer valid due to a growing mortgage fraud problem.

Question # 2: A seller is released from liability on an insured high ratio mortgage once the buyer makes 12 consecutive payments (1 year)

Answer: False. This is a common misconception. The only true protection that can be provided to the seller is a "release letter" issued by the lender (ie. bank) upon the buyer qualifying for the mortgage. Of course, most buyers assume mortgages because they are not able to qualify for a new one.

Because of amendments made to the Law of Property Act, and in effect August 1, 2004, all insured mortgages funded after that date create personal liability for any individual registered as the owner of the property at any point in time during the life of the mortgage.

Question # 3: All corporate mortgagors are ALWAYS liable for a deficiency on the mortgage

Answer: True. Properties registered in corporate names are liable.


Question # 4: There is an ongoing risk for sellers allowing a conventional mortgage (mortgages not exceeding 80% of the price of the home) to be assumed.

Answer: False. In Alberta, there is no PERSONAL liability by individuals on conventional mortgages to be assumed.

Question # 5: There is an ongoing risk for sellers allowing a high-ratio mortgage (mortgages exceeding 80% of the price of the home) to be assumed.

Answer: True. Sellers allowing their high ratio mortgages to be assumed, where the lender has secured high ratio insurance by Genworth Financial Canada (GE Capital) or CMHC, can be held liable.

While CMHC does have a policy that they will generally not chase a prior owner in case of a deficiency on a mortgage, this is not an assured thing. In addition, GE Capital has not declared a similar policy to date.


There are many misconceptions regarding assumable mortgages. If you are thinking about selling your home and letting someone assume the mortgage, please be aware of the risks and ask your mortgage specialist, real estate lawyer, or bank representative before taking any action.