Mortgage security: rights and responsibilities

From: Financial Consumer Agency of Canada

What is mortgage security?

All mortgage loans are secured by real property (or in Quebec, an immovable), such as a house. This means that a “charge” (or “hypothec” in Quebec) is registered against your property in the applicable province or territory and it gives the lender certain rights, including the right to sell the property if the loan is not repaid as agreed.

What is the voluntary commitment on mortgage security?

As of September 1, 2014, banks that offer residential mortgage loans and that are members of ​the Canadian Bankers Association​​ have agreed to adopt a voluntary Commitment to Provide Information on Mortgage Security.

Banks that have adopted the Commitment have agreed to provide the following information about mortgage security by these dates:

  • September 1, 2014: general information on banks’ websites
  • November 30, 2014: general information available in branches and points of service and on request
  • January 31, 2015: specific information before or at the time you enter into the mortgage loan agreement

Banks will provide general comparative information to help you understand the differences between the types of mortgage security taken by a bank for residential mortgage loans. This can help you make an informed decision when choosing your mortgage lender and mortgage product.

Before or at the time you enter into the mortgage loan agreement, the bank will provide you with specific information about the security used for your mortgage loan.

The general and specific information will both cover:

  • transferring or assigning the mortgage security to a new lender
  • borrowing additional funds
  • discharging the mortgage security

Banks will provide the information in a manner that is clear, simple and not misleading.

Your responsibilities

While you are shopping around for a mortgage, ask questions about the way the mortgage security will be registered—as a standard charge or as a collateral charge. Standard charges are also known as conventional charges, non-collateral charges, traditional charges, traditional residential mortgages, residential mortgages, deeds of hypothecary loan and retail mortgages. 

Ask potential lenders about anything that is not clear to you.

Ask how the charge will be registered before you make a final decision so you have time to discuss the advantages or drawbacks of the different types of charges, and to choose the option that best suits your needs.

Before signing your mortgage agreement, you should read and understand the terms and conditions, including those related to mortgage security and the way the charge is registered.

FCAC's role

FCAC monitors banks’ compliance with the voluntary Commitment to Provide Information on Mortgage Security. If you feel that a bank is not respecting its public commitment, contact the Financial Consumer Agency of Canada.

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