Insurance Companies Act

Marginal note:Residential mortgages restriction

• 542.06 (1) A society shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving the property, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed 80 per cent of the value of the property at the time of the loan.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of

  • (a) a loan made or guaranteed under the National Housing Act or any other Act of Parliament by or under which a different limit on the value of property on the security of which the society may make a loan is established;

  • (b) a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or private insurer approved by the Superintendent;

  • (c) the acquisition by the society from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the society to the entity against the issue of those securities; or

  • (d) a loan secured by a mortgage where

    • (i) the mortgage is taken back by the society on a property disposed of by the society, including where the disposition is by way of the realization of a security interest, and

    • (ii) the mortgage secures payment of an amount payable to the society for the property.