Fraction Lending Inc Mortgage Review: Rates, Lending Guidelines and Who They Suit

Fraction Lending Inc Mortgage Review: Programs & Lending Guidelines

How Fraction Lending Inc's lending guidelines read from the broker side — the programs on the shelf, how income is qualified, credit floors, terms and where they lend. Consumer-facing policy only: broker submission mechanics and compensation are out of scope, and guidelines change, so confirm anything you are planning around with the lender or a licensed broker.

Fraction's Mortgage Offering — Residential

Fraction lends against home equity with no monthly payment. Interest accrues onto the balance and everything is settled at the end of the term or on a payout. It is the shape of a reverse mortgage, without the age restriction.

What it will finance: an equity take-out on a home already owned, a refinance of an existing mortgage, and a purchase. Residential property only, owner-occupied — no rentals.

Three programs, distinguished by how much of the home's value can be borrowed against and the credit standard attached to each: a conservative tier at half the value, a middle tier, and a top tier reaching 70%.

All terms are open. One to five years, prepayable at any time with no penalty whatsoever — no interest rate differential, no three months' interest, nothing. That is the trade for the accrual structure and the origination cost, and it is unusual enough to be the defining feature.

There is no home equity line of credit, no bridge financing, no switch program, no assumption and no insured lending. Fraction is not a bank alternative — it is a way to convert equity into cash without a payment obligation.

Fraction Income and Qualification Requirements

There are no debt service ratios. No GDS, no TDS, no stress test — the file qualifies at the contract rate, and since no payment is required, there is nothing to service. This is the single largest difference between Fraction and every conventional and alternative lender in this directory.

What qualifies the file is the property, the equity in it, and a credible plan for how the loan gets repaid at the end of the term. A borrower needs enough equity that the accruing balance stays comfortably inside the value across the term.

Income is still documented, to confirm the household can carry the property and to support the exit — not to service a payment.

Salaried borrowers provide two years of tax documents, an employment letter covering duration and salary, and recent pay records. Hourly borrowers provide the same with guaranteed hours and schedule confirmed. Self-employed borrowers provide two years of returns and assessments alongside six to twelve months of bank statements, with proof of ownership where a business account is used. Pension income is documented with two years of tax slips and six to twelve months of deposits.

Commission, seasonal, investment, disability, support, child benefit, provincial disability and maternity or parental leave income are all considered. Rideshare, delivery and short-term rental income is acceptable where it appears in tax filings and bank statements.

Down payment. On a purchase, roughly 30% to 50% — the equity is the underwriting. Gifted funds are allowed.

Costs are paid from the proceeds rather than out of pocket, except the appraisal, which is paid up front. There is an origination cost, conveyancing, title insurance and independent legal advice.

Independent legal advice is mandatory. Every borrower sits with their own lawyer before signing. On a product where the balance grows without payments, that is the right requirement.

Property taxes must be current, and any tax arrears are cleared from the proceeds.

Fraction's Specialty Programs

The three lending tiers. Each pairs a maximum loan-to-value with a credit standard:

The pattern is worth reading twice: the lowest loan-to-value program carries the highest credit requirement. Pricing and risk are balanced across both variables rather than stacked in one direction, so a borrower with weaker credit is not automatically pushed to the smallest advance.

Interest-only, or rather no-payment. No payments fall due during the term. The balance accrues and is settled at maturity or on payout.

A reverse mortgage without the age test. The structure mirrors a reverse mortgage — accrual, no payments, equity-based — but there is no minimum age, no sliding scale reducing the advance on expensive properties, and no prepayment penalty. A 45-year-old with substantial equity and irregular income can access what would otherwise be a 55-plus product.

Open mortgage for hardship. A product specifically for borrowers in difficulty, which is a candid thing for a lender to publish.

Equity and net worth lending. Assets and net worth are taken into account in the assessment.

New to Canada. Permanent residents and citizens with a credit score of 640 or better.

Power of attorney is accepted with proper documentation.

Minimum Credit Scores & Treatment of Liabilities

Scores by program: 660 for the 50% program, 600 for the 70% program, and 550 for the 60% program — the lowest floor sitting in the middle tier rather than at either end.

Liabilities are not debt-serviced. With no payment obligation, nothing is run through a ratio. What matters is what has to be cleared to fund: any existing mortgage or charge ahead of Fraction, plus tax arrears, all of which come out of the proceeds. Borrowers frequently use the advance to retire other debts, which is often the reason for the transaction.

Property taxes must be current and stay the borrower's responsibility.

Spousal consent is required, and a separation agreement where the couple has separated.

Only Equifax is used.

No heating calculation, no shelter cost, no closing cost requirement — none of the debt-service inputs apply, because there is no debt-service test.

Terms & Amortization Options

There is no amortization. Nothing is being paid down.

Terms. One to five years, all open.

No payments. Nothing monthly, biweekly or weekly. The balance accrues and is settled at the end of the term.

No prepayment penalties, at all. The loan can be repaid at any point during the term with no charge. Partial prepayments are not offered — it is repaid in full or left to accrue.

That combination is the product's argument. On a conventional mortgage, an early payout costs an interest rate differential that can run into five figures. Here it costs nothing, so a borrower who expects to sell, refinance or come into funds inside the term is not gambling on the timing.

Rate hold. 60 days from the point the appraisal is paid for, with the rate locked once the commitment is signed.

Renewal. A refinance or renewal is possible but is underwritten fresh, and the accrued balance will have raised the loan-to-value — which is precisely why the exit plan matters at the outset.

Registration is a standard charge.

Not portable and not assumable.

Special Notes

• No payments and no penalty. The two together are what nothing else in this directory offers. The cost of that flexibility is an accruing balance and an origination fee, both of which should be modelled over the expected life rather than judged on the rate.
• The balance grows. With no payments, the amount owed rises every month. On a five-year term the difference between the advance and the payout is substantial, and it is the number the borrower should be shown before signing.
• No age restriction on reverse-style lending. A borrower under 55 with equity and inconsistent income has few options; this is one.
• The credit ladder runs backwards. The 50% program wants the highest score and the 60% program the lowest.
• An exit plan is part of the file. How the loan is repaid at maturity is underwritten alongside the property.
• Independent legal advice is mandatory — a genuine protection on an accruing-balance product.
• Costs come out of the advance, except the appraisal, which is paid up front. There is an origination cost, conveyancing, title insurance and legal advice, and together they mean the balance starts above what the borrower actually receives.
• No rentals. Owner-occupied residential only.
• Only Equifax is used.
• Short-term rental, rideshare and delivery income counts, where it is documented in tax filings and bank statements.
• Mobile and modular homes are considered, and small condominiums are accepted where there are enough comparable sales to value them confidently. Property size is judged on the appraiser's confidence rather than a fixed floor.

Service Area

Ontario, Alberta and British Columbia only.

Nothing in Quebec, the Atlantic provinces, Saskatchewan, Manitoba or the territories.

Rural properties are eligible on a house plus up to ten acres, with no active farming on the land. Cottages and recreational properties are considered where there are enough comparable sales and the property is genuinely four-season.

Because every file rests on a full appraisal by an accredited appraiser, the practical limit is not a municipal list but whether the property can be valued with confidence. A home with few comparable sales is harder to place here regardless of where it sits.

Loan-to-Value Treatment

No sliding scale. The ratio holds at the same level on an expensive property as on a modest one — a real difference from most lenders here, where lending above a threshold drops to half the value. On a $2 million home in Vancouver or Toronto, that is a large absolute difference.

Loan size. From $50,000 to $1.5 million.

On a purchase, the down payment runs roughly 30% to 50%, matching the program tiers from the other direction.

The ratio moves during the term. Because interest accrues rather than being paid, the balance climbs and the loan-to-value with it. Fraction underwrites the file so that the ending ratio stays inside a workable range, which is why the starting advance is conservative relative to a conventional mortgage — and why a longer term means a smaller advance on the same property.

Every file rests on a full appraisal by an accredited appraiser. There is no automated valuation route here.