The Pros and Cons of Umbrella Mortgages


Claire Harvey, Geneviève Charlet, Dominique Gervais


Option consommateurs




Since 1994, under Article 2797 of the Civil Code of Quebec, mortgage agreements have increasingly stipulated that the mortgage will be used not only as security for the mortgage loan itself, but also the present and future obligations of the consumer and sometimes those of a third party, such as a spouse. This is called a deed of hypothecary loan, loosely referred to as an umbrella mortgage.

There are many questions raised by this new kind of mortgage agreement. What are its advantages and disadvantages for consumers? Does it allow consumers to save on interest charges? What is the difference between the umbrella mortgage agreement and the traditional (“immovable” hypothecary) mortgage agreement?

To get a better idea of the issue, 20 semi-structured interviews were conducted by OC with consumers who have taken out a mortgage in the past 12 months. OC found that most were unfamiliar with the specific details of their credit instrument. To investigate in greater depth, OC also conducted four focus groups, two in Montreal and two in Quebec. Finally, OC proceeded to identify the laws regulating umbrella mortgage agreements in Canada and to analyze the legal framework of these laws, in Quebec, Ontario, British Columbia and Newfoundland and Labrador.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.

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Source: Consumer Policy Research Database

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