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Amendment
A mortgage amendment is a formal change to specific terms of an existing mortgage agreement, approved by the lender, without replacing or re-registering the original mortgage contract or charge.
Amendment – Quick Facts
• Changes the limited terms of an existing mortgage
• Does not replace or discharge the mortgage contract or charge
• Requires lender approval and documentation
• Typically avoids full refinance and legal costs
• Commonly used for changes to rate, term, or payment adjustments
What Is a Mortgage Amendment?
A mortgage amendment allows a borrower and lender to adjust specific terms of a mortgage without cancelling the original agreement. The mortgage remains in place, but selected elements such as the interest rate, payment amount, or term length are modified through an amendment document.
In Canada, amendments are commonly used when borrowers want flexibility without the cost and complexity of a refinance. When leaving the mortgage balance untouched, amendments are faster, cheaper, and administratively simpler than replacing the mortgage entirely.
Why Do Mortgage Amendments Matter?
Mortgage amendments allow you to adapt an existing mortgage to changing circumstances without triggering a complete requalification process. By preserving the original contract, borrowers can reduce fees, paperwork, and regulatory friction while still adjusting key terms.
For many borrowers, amendments offer a practical middle ground between leaving a mortgage unchanged and refinancing it entirely.
How Do Mortgage Amendments Affect Borrower Segments?
Homebuyers: Mortgage amendments typically apply after underwriting or closing. If rates decline or household cash flow changes, an amendment may allow payment or term adjustments without requalifying.
Renewers: At renewal, lenders may use amendments to adjust rates or terms while keeping the original mortgage registration. A renewal without switching lenders often helps borrowers avoid legal and discharge costs.
Refinancers: Amendments cannot increase the mortgage balance. Borrowers who want to access equity or consolidate debt must refinance instead. However, lenders may be able to access an increase without a refinance via a blended mortgage, provided the increase does not exceed the limit of the mortgage charge registered against the property title.
Example of a Mortgage Amendment
Imagine a borrower with the following mortgage:
Mortgage balance: $400,000
Remaining amortization: 20 years
Original rate: 5.00%
If the lender approves an amendment lowering the rate to 4.50%, the monthly payment decreases because less interest is charged. The principal balance remains unchanged, and no mortgage stress test is required because no new credit is extended.
Common Mistakes and Misunderstandings About Mortgage Amendments
• Assuming home equity can be accessed through an amendment
• Confusing amendments with refinances
• Overlooking potential amendment or administrative fees
• Assuming lender approval is automatic
• Not checking how penalties are recalculated after an amendment
Frequently Asked Questions (FAQ) About Mortgage Amendments
Do mortgage amendments trigger the stress test?
The stress test is not triggered as long as the mortgage amortization and balance do not exceed the charge registered against the property title, and requalification is typically not required.
Are amendments cheaper than refinancing?
Yes, mortgage amendments usually avoid home appraisal, legal, and discharge costs.
Can a lender refuse an amendment?
Yes, mortgage amendments are discretionary and must be approved by the lender.
Can an amendment change my payment amount?
Yes, monthly payments will change if the interest rate, term, or amortization is adjusted.
Does an amendment reset my mortgage penalty?
Yes, amendments will reset the penalty calculation to reflect the new terms and conditions of the amended mortgage.
Related Terms
• Mortgage Renewal
• Refinance
• Blended Mortgage
• Contract Rate
• Amortization Period