Promissory.ca Compare options

Interest Act disclosure rules

Where a mortgage or agreement for sale provides for interest but does not state an annual rate or percentage, interest is not chargeable at a rate exceeding 5%…

By Promissory.ca Editorial Team Reviewed against official Canadian sources Last updated:

The rule

The Interest Act, section 4, provides that where a mortgage or an agreement for sale provides for interest but does not state an annual rate or percentage, interest is not chargeable at a rate exceeding 5% per annum.

Why it matters

The rule protects borrowers from ambiguous agreements. It is one reason lenders must clearly disclose the annual interest rate in a mortgage document.

  • The criminal rate of interest (35% APR) is the outer ceiling on the cost of credit.
  • Provincial consumer protection legislation adds further disclosure and cancellation rights.

Source: Interest Act (R.S.C., 1985, c. I-15) — Government of Canada — Justice Laws. Retrieved 2026-09-16.

Source: Criminal Code, s. 347 — Criminal interest rate — Government of Canada — Justice Laws. Retrieved 2026-09-16.

Sources

Frequently asked questions

What does the Interest Act require?

Where a mortgage or agreement for sale provides for interest but does not state an annual rate, interest is capped at 5% per annum under section 4.

Does the Interest Act apply to personal loans?

The 5% default rule in section 4 applies specifically to mortgages and agreements for sale. Other consumer credit is governed by the criminal rate of interest and provincial rules.

Where can I read the Interest Act?

The full text is published on the Justice Laws website of the Government of Canada.

Important legal information

Promissory.ca is not a lender, bank, mortgage broker or credit counsellor. We do not make lending decisions and we do not charge you a fee to use this service.

Submitting an application does not guarantee approval. All applications, rates and terms are set and approved solely by the individual lender or licensed professional.

Rates, fees and loan amounts vary by lender, province, loan type and your credit profile. Advertised rates are the lender's lowest offered rate and may not be available to you.

Lenders may perform a credit check with one or more credit bureaus, including Equifax and TransUnion. A hard credit inquiry may affect your credit score.

There is no obligation to accept any offer presented to you. Review every agreement carefully before signing.

Borrow only what you can reasonably afford to repay. Late or missed payments may result in additional fees, collection activity and negative credit reporting.

We handle personal information in accordance with the Personal Information Protection and Electronic Documents Act (PIPEDA). See our Privacy Policy for how we collect, use and protect your information.

If you are struggling with debt, consider contacting a non-profit credit counselling service or a Licensed Insolvency Trustee before borrowing more.