5.3.4 Mortgage rights and responsibilities

When you are looking for a mortgage, you have both rights and responsibilities.

Your rights

• Financial institutions must provide you with clear information about your mortgage. The information required depends on the type of mortgage. It includes:
  • the principal, interest rate, term, amortization period and payments
  • your prepayment rights and any charges that apply
  • the cost of default insurance and any other fees that may apply
  • how interest is calculated and applied.
• When the mortgage term ends, you have a right to renew your mortgage at another institution. However, some mortgages renew automatically unless you negotiate new terms.
• Lending institutions cannot require you to buy other products from them in order to get a mortgage. For example, if they require you to buy mortgage insurance, they can't say that you must buy the insurance from them. They can't require you to open a banking or credit card account. But they can offer better mortgage terms if you agree to use some of their other services.
• Most financial institutions have a way to work out complaints if you have a problem with your lender. You can ask to speak to a supervisor or a complaints officer. If the complaints process is not working, contact the Financial Consumer Agency of Canada or the Ombudsman for Banking Services and Investments. (The Financial Consumer Agency of Canada can investigate if a federally regulated financial institution does not live up to its obligations.) If you're dealing with a credit union, a caisse populaire or a provincial chartered trust or insurance company, contact your provincial or territorial regulator.

Your responsibilities

• Before signing, you have a responsibility to read and understand the terms and conditions of your mortgage agreement. Ask questions about anything that is not clear.
• Once you have signed the contract, you are bound by all the written terms. The written agreement overrides anything anyone has said to you, so if the lender's representative has made a commitment to you, make sure it's in the contract. (Take notes when you're talking to the representative so that you can check that everything is in the written contract.)
• Your main responsibility under a mortgage is to make the agreed payments in full and on time. You will likely have to pay penalties if you miss any payments.
• If you don't live up to the terms of the agreement, the lender can take the property you have mortgaged and sell it to recover the amount left on the loan. If there's not enough money from the sale, the lender can also sue you personally for the difference. These steps can affect your credit rating and your ability to borrow money for many years.