fraction.com

What It Is

Fraction Mortgage is an innovative home-equity lending platform in Canada. Its core product is a “no-monthly-payment mortgage,” which allows homeowners to pause repayments for up to 5 years, with no prepayment penalty. It is designed to help homeowners unlock home equity for short-term liquidity needs without adding pressure to monthly cash flow.

Key Dimensions

• Service Type and Coverage: Focuses on first-lien, no-monthly-payment mortgages. Currently available only for freehold residential properties in British Columbia (BC), Ontario (ON), and Alberta (AB), Canada.
• Rates and Fees: 1-year rates start from 7.99%, while 3- to 5-year rates float based on CORRA swap rates. Maximum LTV is 60%. Fees include an origination fee starting from 1%, plus third-party costs such as appraisal fees ($400-$600), independent legal advice ($900-$1500), and closing and title insurance (around $2000). One important point: because there are no monthly payments, interest compounds daily.
• Compliance and Risk Controls: Requires a first-ranking lien, meaning any existing mortgage must be paid off. For 3- to 5-year terms, the minimum FICO score is 660; for 1-year terms, it is 550. The minimum loan amount is $100,000. Risk assessment relies on third-party property appraisals, and loans above C$1 million require a home inspection.
• API and Integrations: Broker-friendly, with submissions supported through Filogix Expert, Newton Velocity, and Finmo. It also offers a dedicated iPhone App and promises a 24-hour approval turnaround.

Pricing, Pros, and Cons

Pricing follows an “origination fee + compound interest” model. While the lack of monthly payments reduces short-term pressure on cash flow, the compounding structure can result in a significantly higher repayment amount at maturity. Pros include truly zero monthly payments, no penalty for early repayment at any time, and no age restrictions (making it more flexible than a reverse mortgage). Cons include high compounding interest costs, availability limited to three Canadian provinces, the requirement to pay off any existing mortgage, and relatively high third-party fees.

Who It’s For and Access from China

This product is suitable for Canadian homeowners with substantial home equity but short-term cash-flow needs, such as funding a business, consolidating debt, or renovating a property. It is also relevant for mortgage brokers looking for non-standard lending products. For users in China, the service is entirely based on Canadian real estate. Access from China is unknown, and it does not support domestic Chinese payment methods. There is no direct equivalent for mainland users; local Canadian reverse mortgages or HELOCs are the closest comparable products.