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Banks, insurance companies and trust and loan companies that are federally regulated must provide you with the following information, before you sign a mortgage agreement or contract.
If you applied for a fixed-rate mortgage:
- the amount that is being lent to you;
- the term of the loan and the period of amortization;
- the total of your payments at the end of the term;
- of that total, how much you will have paid in interest charges at the end of the term;
- your annual interest rate;
- the real annual interest rate, when you include the extra charges related to your mortgage (e.g., administrative fees, brokers’ fees, etc.) that the lender might add on top of your interest charges. Note: This rate is also called the "APR" (annual percentage rate);
- the date on which you will start being charged interest;
- the amount of your payments, and when they are due;
- the fact that your payments will be applied first to cover interest and other charges, and then to the outstanding principal;
- the optional services (e.g., disability or life insurance) you accepted, how much they cost, and what will happen, in terms of rebates, charges and penalties, if you decide to cancel these services;
- how the rebates, charges or penalties will be calculated if you decide to repay your mortgage before maturity;
- the default charges that may apply if your mortgage is in default for any reason;
- a description of the property (if any) being provided as a security for the loan;
- whether there were any broker fees – paid by the financial institution to a broker – included in the amount lent to you;
- whether you will have to pay a fee to discharge the mortgage when the financial institution's interest in your home ends, after you pay it off, and how much this fee is quoted on the date of the disclosure statement;
- whether you will have to pay any other charges, in addition to interest and the other charges mentioned previously. If so, the type of charges and how much you will have to pay.
If you applied for a variable-rate mortgage:
If you applied for a variable-rate mortgage, your federally regulated bank, insurance company or trust and loan company must also provide you with the following information:
- the annual interest rate that applies to your mortgage as of the date of the disclosure statement;
- how the annual interest rate is calculated and when this calculation is made;
- how much your payments are, based on the annual interest rate, as of the date of the disclosure statement and when they are due;
- what your total payments will be at the end of your term, based on the annual interest rate as of the date of the disclosure statement;
- if you applied for a variable-rate mortgage and the amount of your mortgage payment is not adjusted automatically to reflect changes in the annual interest rate that applies to each payment (in other words, where your payment amount does not vary when the interest rate changes), you must be provided with the following information:
- the annual interest rate above which your payments will not be sufficient to cover the interest due on your loan for the period; and
- the fact that negative amortization is possible (this is when the outstanding balance you owe increases instead of decreases even if you make your payments in full).
- if interest rate variations are linked to a public index, the financial institution must provide you, at least once a year, with a disclosure statement containing the following information:
- the annual interest rate and outstanding balance at the beginning and end of the period covered by the statement; and
- the amount of each payment and when each payment is due, based on the annual interest rate that applied at the end of the period.
When Your Mortgage Agreement Changes
Your institution will generally not make changes to your mortgage agreement without your agreement. If your lending institution makes changes to your original mortgage agreement, it must provide you, in writing, with the details of these changes 30 days, at the latest, after the changes take effect.
When You Renew Your Mortgage
At the end of your mortgage term, if your lending institution wants to renew your mortgage, it must provide you with a new statement at least 21 days before the end of the existing term. This statement must contain the same information as when you apply for a new mortgage and may be combined with a mortgage renewal agreement. If the lending institution decides not to renew your mortgage, it must notify you about this decision at least 21 days before the end of your term.
Remember that you are not obliged to renew your mortgage with the same institution. Approximately four months before your renewal date, you should contact various mortgage brokers and lending institutions to find a new mortgage with the conditions that best suit your needs. If you do not shop around and negotiate, your mortgage will likely be renewed automatically, and you may not obtain the best interest rates and conditions.
Find out more about the New Concept Mortgages.
Source: FCAC
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