The Canadian Mortgage Charter was introduced in late 2023 as millions of Canadian homeowners faced mortgage renewals at significantly higher interest rates. Here is what the charter includes, who it protects, and how to use it if you are struggling with your mortgage payments.
Background: why the charter was created
Between 2020 and 2022, the Bank of Canada’s overnight rate was near 0.25%, and variable-rate mortgage holders enjoyed historically low payments. By late 2023, the rate had risen to 5.00% — a 20-fold increase. This created a mortgage renewal cliff:
- Borrowers who locked in at 1.5%–2.5% faced renewals at 5%–6%
- Variable-rate borrowers saw payments increase by 40%–60%
- Many borrowers with fixed-payment variable mortgages hit their trigger rate, where payments no longer covered the interest
The Mortgage Charter was the federal government’s response — providing a framework for lender relief measures without requiring new legislation.
What the Mortgage Charter includes
The charter outlines specific expectations for how federally regulated lenders must treat borrowers, particularly those facing financial hardship.
Relief measures for all borrowers
| Provision | What It Means |
|---|---|
| Contact before renewal | Lenders must reach out to borrowers 4–6 months before renewal with information about their options |
| No fees for relief measures | Lenders cannot charge fees for accessing hardship relief (amortization extensions, payment deferrals) |
| No negative credit reporting for relief | Using mortgage relief measures should not negatively affect your credit score, as long as you are making the agreed-upon modified payments |
| Internal support teams | Lenders must have dedicated teams to help borrowers in financial difficulty |
Relief for borrowers in financial hardship
| Provision | What It Means |
|---|---|
| Temporary amortization extensions | Extend your amortization to reduce monthly payments without re-qualifying under the stress test |
| Lump-sum payment permission | Make lump-sum prepayments to reduce your principal without penalty, at any time you have the funds |
| Waived prepayment penalties on sale | If you are selling your principal residence because of financial hardship, lenders should waive or reduce prepayment penalties |
| No interest on interest | Lenders should not charge interest on interest that has accumulated due to negative amortization from trigger-rate situations |
Renewal protections
| Provision | What It Means |
|---|---|
| Switch lenders without stress test | Borrowers renewing an uninsured mortgage can switch to a new lender at renewal without re-qualifying under the new stress test (if the mortgage is not increasing) |
| Fair renewal rates | Lenders should offer renewal rates that are competitive, not penalty rates designed to retain borrowers who cannot easily switch |
| Early renewal information | Lenders must provide renewal information early enough for borrowers to shop around and negotiate |
Who is covered — and who is not
| Lender Type | Covered by Charter? | Examples |
|---|---|---|
| Big Six banks | Yes | RBC, TD, BMO, Scotiabank, CIBC, National Bank |
| Other federal lenders | Yes | Equitable Bank, First National, Manulife Bank, HSBC (now RBC) |
| Provincial credit unions | No | Desjardins, Meridian, Vancity, Coast Capital |
| Mortgage investment corps (MICs) | No | Various private MICs |
| Private lenders | No | Individual private lenders, alternative lenders |
If your mortgage is with a provincial credit union, you are not covered by the federal charter. However, many credit unions have voluntarily adopted similar practices, and provincial regulators may have their own consumer protection requirements.
How to use the charter if you are struggling
Step 1: Contact your lender early
Do not wait until you miss a payment. As soon as you anticipate difficulty making your mortgage payments, contact your lender. Under the charter, they are expected to have dedicated support teams for borrowers in hardship.
Step 2: Know your options
Before you call, understand what you can ask for:
| Option | Effect on Payments | Long-Term Impact |
|---|---|---|
| Extend amortization | Reduces monthly payment | More total interest paid over the life of the mortgage |
| Switch to interest-only payments | Significant short-term reduction | No principal repayment during the period; balance stays the same |
| Payment deferral | Pause payments temporarily | Missed payments added to principal; total mortgage cost increases |
| Lump-sum prepayment | Reduces principal, lowering future interest | Requires available cash |
| Port the mortgage | Keep your current rate if moving | Must sell and buy within a set window (usually 90–120 days) |
Step 3: Get everything in writing
Any agreement for modified payments, extended amortization, or other relief should be documented in writing. This protects you if there is a dispute later about what was agreed.
Step 4: Escalate if needed
If your lender is not offering the protections outlined in the charter:
- Internal complaint — File a formal complaint with the lender’s complaints department
- External ombudsman — Escalate to the lender’s external complaint body (ADRBO or OBSI)
- FCAC complaint — File a complaint with the Financial Consumer Agency of Canada
Limitations of the Mortgage Charter
The charter is an important step, but it has significant limitations:
- Not legally enforceable — Lenders are expected to comply, but there are no penalties in the charter itself for non-compliance. FCAC oversight provides some enforcement, but it is not the same as legislation
- Does not cover all lenders — Credit unions, MICs, and private lenders are not covered
- Temporary relief, not permanent solutions — Extended amortization and payment deferrals reduce short-term pain but increase total mortgage cost
- Does not reduce what you owe — No provision of the charter reduces your principal or forgives debt
- Applies to hardship situations — The charter is designed for borrowers in financial difficulty, not a way for all borrowers to negotiate better terms
Mortgage Charter vs other consumer protections
| Protection | What It Covers | Enforcement |
|---|---|---|
| Canadian Mortgage Charter | Lender relief obligations during hardship | FCAC oversight (not legislation) |
| OSFI Guidelines (B-20) | Stress test, underwriting standards | Legally binding for federal lenders |
| Bank Act | Broad banking regulations | Federal legislation |
| Provincial consumer protection | Varies — disclosure, fair lending | Provincial legislation |
| FCAC Code of Conduct | Broader financial consumer protections | FCAC oversight and enforcement |
The impact so far
Since the charter was introduced, the major banks have formalized hardship programs:
- Amortization extensions have been the most commonly used relief measure, with hundreds of thousands of borrowers temporarily extending their amortization to 30, 35, or even 40 years
- Trigger-rate borrowers — Those with fixed-payment variable mortgages where payments no longer covered the interest have been able to adjust payments or extend amortization without penalty
- Renewal switching — The provision allowing borrowers to switch lenders at renewal without re-qualifying under the stress test has increased competition at renewal time
The bottom line
The Canadian Mortgage Charter provides a framework for relief if you are struggling with mortgage payments, but it is not a silver bullet. It does not reduce what you owe, and it only applies to federally regulated lenders. If you are facing higher payments at renewal or struggling with current payments, contact your lender early, know your options, and do not hesitate to escalate if you are not getting the help the charter promises.