Uninsured / Conventional Mortgage

A conventional or uninsured mortgage is one where the borrower provides a down payment of 20% or more of the purchase price, meaning the loan-to-value ratio does not exceed 80%. Because the down payment meets or exceeds this threshold, the lender is not required under federal rules to obtain mortgage default insurance from providers such as CMHC, Sagen, or Canada Guaranty. In BC, this applies to purchases of all property types, including detached homes, strata lots governed by the Strata Property Act (SBC 1998, c. 43), and other residential properties.

Yes, the federal mortgage stress test applies to uninsured mortgages obtained through federally regulated lenders such as chartered banks in BC. Borrowers must qualify at the higher of the lender's contracted interest rate plus 2%, or the Bank of Canada's published minimum qualifying rate. Credit unions in BC are provincially regulated and may apply different qualifying criteria, so borrowers should confirm the specific requirements directly with their chosen lender.

BC credit unions are regulated provincially under the Financial Institutions Act rather than by the federal Office of the Superintendent of Financial Institutions (OSFI), so they are not legally bound by the federal mortgage stress test rules that apply to federally regulated lenders. However, individual BC credit unions may voluntarily adopt similar qualifying criteria or apply their own internal underwriting standards. Borrowers should ask their credit union directly about the qualifying requirements for a conventional mortgage.

When purchasing a strata lot with a conventional mortgage, the lender will typically require a review of key strata documents, including the Form B Information Certificate (which discloses strata fees, outstanding levies, and bylaw information) as required under the Strata Property Act (SBC 1998, c. 43). Lenders may also consider the strata corporation's depreciation report and the status of the contingency reserve fund when assessing the property's suitability as security. A large special levy or underfunded reserve fund can affect the lender's willingness to approve the mortgage even when the down payment meets the 20% threshold.

No, the type of mortgage used — insured or conventional — does not reduce or affect the Property Transfer Tax (PTT) payable under the BC Property Transfer Tax Act. PTT is calculated on the fair market value of the property at standard rates of 1% on the first $200,000, 2% on the portion between $200,001 and $2,000,000, 3% on the portion between $2,000,001 and $3,000,000, and an additional 2% on the residential portion exceeding $3,000,000. Eligible buyers may qualify for separate exemptions such as the First-Time Home Buyers' Program (full exemption up to $835,000) or the Newly Built Home Exemption (up to $1,100,000), but these exemptions are based on buyer status and property type, not mortgage type.

BC real estate licensees are governed by the Real Estate Services Act (RESA) and its Rules, enforced by the British Columbia Financial Services Authority (BCFSA). Licensees must disclose any conflicts of interest and act in the client's best interests, but they are not mortgage brokers and should not provide mortgage advice unless also licensed under the Mortgage Brokers Act. If a licensee has a financial interest in the lender or mortgage product being discussed, that interest must be disclosed in writing to the client as required under RESA.

There is no restriction under BC mortgage law on using a conventional mortgage to finance the purchase of land within the Agricultural Land Reserve (ALR), administered by the Agricultural Land Commission (ALC) under the Agricultural Land Commission Act (SBC 2002, c. 36). However, lenders will conduct their own assessment of the property's value and marketability, which can be affected by ALR restrictions on non-farm use, subdivision, and residential development. Buyers of ALR land should consult the ALC directly regarding permitted uses before assuming the property will meet a lender's security requirements.

When a property owner with a conventional mortgage dies in BC, the mortgage remains a charge on the property and does not automatically discharge upon death. The estate is administered under the Wills, Estates and Succession Act (WESA), and the executor or administrator is responsible for ensuring mortgage obligations are met from estate assets or through the sale or transfer of the property. If the property is transferred to a beneficiary who assumes the mortgage, the lender's consent is typically required, and the lender may apply its standard qualifying criteria to the assuming party.

Unlike some other Canadian provinces, BC does not use a power-of-sale process for mortgage default. Foreclosure in BC is a judicial process conducted through the BC Supreme Court, governed by the BC Supreme Court Civil Rules and the Law and Equity Act. The lender must commence court proceedings to obtain an order for foreclosure or a judicial sale of the property, and the court retains oversight of the process to protect the interests of the borrower and any other parties. Because default insurance is not involved in a conventional mortgage, the lender bears the full risk of any shortfall between the outstanding loan balance and the net sale proceeds.

If a BC real estate licensee collects personal financial information from a client — such as details about their conventional mortgage application — that information is subject to the Personal Information Protection Act (PIPA) of BC. Under PIPA, licensees must obtain consent before collecting, using, or disclosing personal information, and must use that information only for the purposes for which it was collected. Licensees should also be aware that sending unsolicited commercial electronic messages related to mortgage products or real estate services is governed by Canada's Anti-Spam Legislation (CASL), which requires express or implied consent before such messages are sent.