We are committed to helping our borrowers understand their mortgages and their options.
We have put together these tips and tools for you, and welcome you to contact us directly if you have any further questions or concerns.
As a mortgage is a legally registered document, it must also be legally discharged. If you wish to pay out your mortgage, you must arrange for a lawyer or notary to act on your behalf. They will contact us for a payout statement, send us funds upon completion, and prepare and register the discharge documents at the land titles office.
Our mortgages are usually written for 1 year terms, but we are happy to offer renewal if the mortgage is not in default. We send out renewal offers 1-2 months prior to maturity.
Along with the signed renewal documents and disclosure, we generally require the following updated information:
Most of our mortgages are set up with pre-authorized payments. If you have missed or bounced a payment, just send us an email giving us instructions to re-take the amount plus the fee. NSF fees are usually $150.00 per missed or late payment.
Otherwise, you can send in a cheque or bank draft payable to your lender.
Contact Drea to arrange a replacement payment.
New mortgages are typically set up with interest only payments. Upon renewal, however, most lenders require Principal and Interest (P&I) payments so that the principal balance will begin to be paid down. If you prefer a different payment amount or amortization, feel free to contact us to discuss your options!
We require proof of current property insurance at all times. The insurance company may notify us if your policy is cancelled mid term, but they will not always advise us if you change insurance companies upon renewal. If you do make a change, please send us a copy for our records.
The number of years, at a constant rate of repayment, required to repay the mortgage in full (longer amortization = lower payments = longer to repay in full; shorter amortization = higher payments = shorter time to repay in full). Repayment of an amortized loan is a blended principal and interest payment.
Some mortgages have a penalty should the mortgage be paid out prior to its maturity date. Generally, the penalty applies to paydowns as well.
3 months interest, or interest to maturity
This is a penalty of 3 months of interest if you pay out prior to the maturity date. If the remainder of your mortgage term is less than 3 months, a penalty of interest to maturity will apply.
If your mortgage is open, there is no penalty for paying out early or making principal paydowns.
Minimum 3 months interest earned
This means that if you payout the mortgage within the first 3 months, you will be charged the remaining interest for the 3 month period. The mortgage will be open after 3 months has passed.
This ratio represents the total amount of the loan (plus any prior mortgages) as compared to the property value.
Mortgage Loan $700,000
Property Market Value $1,000,000
$700,000 / $1,000,000 = 70% (Loan to Value Ratio)
Lenders use LTV when they are evaluating risk, which will affect their decision of how much they are willing to lend, and what interest rate they will charge.
This interest rate will reflect the overall annual percentage rate including costs of borrowing (interest to be paid over the term of the mortgage, lender fee, broker fee, appraisal fee, legal fees etc.) The annual percentage rate will be higher than the face rate of the mortgage as a result.
The APR will show on your disclosure statement.
This is the minimum payment required to pay only the interest due on the loan. At the end of the term, the principal balance will remain the same.
We generally offer interest only payments for the 1st term, but require Principal and Interest payments starting in Term 2.
These payments cover the monthly interest owing, as well as pay down a portion of the principal balance each month. They are also called amortized payments. The amortization period is the number of years it would take to pay out the mortgage in full with a particular payment.