What is an all-inclusive mortgage or wraparound mortgage in Ontario?

An all-inclusive mortgage (AIM), sometimes called a wraparound mortgage, is a financing structure in which a new lender — often the seller — provides a mortgage that includes, or "wraps around," an existing first mortgage on the property. The new mortgage covers the entire financing amount, and the new lender continues to make payments to the original first mortgage lender on the borrower's behalf.

These structures are more common in private and creative financing arrangements, particularly when a seller wants to continue earning interest on a favourable existing mortgage. For example, a seller with a mortgage at a lower rate might wrap it with a new loan to the buyer at a higher rate, pocketing the spread.

All-inclusive mortgages carry significant legal complexity in Ontario. The original first mortgage may contain a due-on-sale clause, which would allow the first lender to demand full repayment if it discovers the property has transferred without its consent. The buyer in an AIM is entirely dependent on the new lender to keep the first mortgage current — if they do not, the first mortgage lender can take enforcement action the buyer may not even be aware of. These arrangements require experienced legal review by both parties. They are not common in standard residential transactions and should be approached with caution.