Mortgage Commitment

A Mortgage Commitment Letter is a written document from a lender that legally commits to providing mortgage financing, setting out the interest rate, payment amount, term, amortization, prepayment terms, fees, and total cost of borrowing. Under federal law—specifically the Bank Act Cost of Borrowing Regulations for federally regulated lenders—this disclosure must be provided before final mortgage documents are signed. For non-bank lenders, equivalent provincial consumer protection rules apply; verify current requirements with a BC lawyer or notary. The commitment forms part of the conveyancing file reviewed at completion under standard BC conveyancing practice.

Yes, a properly issued Mortgage Commitment Letter is generally a binding contract between the lender and borrower, subject to the conditions stated within it (such as satisfactory property appraisal, title, and employment confirmation). The enforceability of the commitment depends on whether all conditions precedent have been met or waived. Verify the specific terms and conditions of your commitment with a BC lawyer or notary before relying on it. The commitment does not constitute final mortgage documents; those are executed at completion/closing.

A Mortgage Commitment must disclose the principal amount, interest rate (fixed or variable), term, amortization period, payment frequency and amount, prepayment privileges and penalties, any fees or costs charged by the lender, and the total cost of borrowing expressed as an annual percentage rate. These disclosures are required under the federal Bank Act Cost of Borrowing Regulations (for banks) or equivalent provincial consumer protection rules (for credit unions and mortgage investment corporations); verify current regulatory disclosure requirements with a BC lawyer, notary, or the Financial Consumer Agency of Canada (FCAC). The commitment must be provided in writing before the borrower signs final mortgage documents.

The validity period of a Mortgage Commitment is set by the lender and stated in the commitment letter itself; common periods range from 30 to 120 days (as of 2026-07-27 — verify current), but there is no statutory minimum or maximum under BC or federal law. If the commitment expires before completion, the borrower may need to request an extension or re-qualify at current rates. Verify your commitment's expiry date and extension options with your lender and conveyancing lawyer or notary before your completion date.

If a condition precedent (such as satisfactory appraisal, clear title, proof of employment, or fire insurance) is not satisfied or waived by the lender, the lender is generally entitled to withdraw the commitment and refuse to fund the mortgage. This can prevent the real estate transaction from completing on the scheduled completion date, potentially resulting in breach of the Contract of Purchase and Sale. Verify all conditions and their deadlines with your BC lawyer or notary immediately upon receiving the commitment, and ensure all conditions are met or waived in writing before your completion date.

No, the Mortgage Commitment Letter itself does not directly affect Property Transfer Tax (PTT) liability under the Property Transfer Tax Act, RSBC 1996, c. 378. PTT is calculated on the fair market value or purchase price of the property (whichever is higher) and is payable on or before registration of title, regardless of mortgage financing. Exemptions such as the First-Time Home Buyer Exemption (threshold up to $835,000 as of 2026-07-27 — verify current) and Newly Built Home Exemption are determined by the property, purchaser status, and use—not by the mortgage terms. Verify PTT liability and exemptions with your BC lawyer or notary before completion.

Generally, a lender cannot unilaterally change the material terms (interest rate, amount, term, fees) after issuing a binding Mortgage Commitment, unless the commitment expressly reserves the right to do so or a stated condition is not met. Any material change would typically require the borrower's written consent or constitute a breach of the commitment contract. Verify any proposed changes or amendments with a BC lawyer or notary immediately, and obtain written confirmation of all agreed terms before signing final mortgage documents. The commitment and final mortgage must comply with the disclosure requirements under the Bank Act Cost of Borrowing Regulations or equivalent provincial rules.

The purchaser's lawyer or notary public reviews the Mortgage Commitment Letter as part of the conveyancing process to ensure the mortgage terms are acceptable, all conditions can be satisfied, and the commitment will not expire before the completion date. The lawyer or notary also confirms that the mortgage amount, together with the purchaser's funds, will be sufficient to complete the purchase and pay all required adjustments, fees, and taxes (including Property Transfer Tax under the Property Transfer Tax Act). Verify your conveyancing timeline and document requirements with your BC lawyer or notary at the outset of the transaction.

No. A mortgage pre-approval or rate hold is typically a conditional, preliminary indication of borrowing capacity and an interest rate guarantee for a limited period (often 90 to 120 days as of 2026-07-27 — verify current), but it is not a binding commitment to lend on a specific property. A formal Mortgage Commitment Letter is issued only after the lender has reviewed and approved the specific property (appraisal, title, insurance) and confirmed the borrower's income, credit, and down payment. Verify the status and conditions of any pre-approval or commitment with your lender and BC lawyer or notary before making a firm offer on a property.

There is no statutory requirement under the Real Estate Services Act (RESA), SBC 2004, c. 42, or the RESA Rules that you provide your Mortgage Commitment Letter to your real estate licensee. However, your licensee may ask for confirmation that financing has been arranged (especially if the Contract of Purchase and Sale includes a financing subject clause) to ensure the transaction can complete. You should provide a copy to your conveyancing lawyer or notary, who is responsible for reviewing it and ensuring all conditions are met before completion. Verify disclosure obligations and timing with your BC lawyer or notary and discuss any subject-removal deadlines with your licensee.