Your Rights and Responsibilities: Mortgages

Applying for a mortgage

• Information that must be provided to you
  
  
• If you apply for a fixed-rate mortgage
  
  
• If you apply for a variable-rate mortgage
  
  
• Information that must be provided in an information box at the beginning of your mortgage agreement
  

Information that must be provided to you

Federally regulated financial institutions must provide you with the following information, before you sign a mortgage agreement or mortgage contract.

If you apply for a fixed-rate mortgage

If you apply for a fixed-rate mortgage, your federally regulated bank, insurance company or trust and loan company must provide you with the following:

• the amount that is being lent to you;
  
  
• the term of the loan and the amortization period;
  
  
• 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, also called the "APR" or annual percentage rate (this would not include fees such as administrative fees, brokers' fees, etc., unless they are included in the amount borrowed);
  
  
• 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;
  
  
• optional services you accepted (such as disability or life insurance), how much they cost and what will happen — in terms of rebates, charges or 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 the maturity date;
  
  
• the default charges that may apply if your mortgage has defaulted, for any reason;
  
  
• a description of the property being provided as 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 you were quoted for this fee on the date of the disclosure statement;
  
  
• whether you will have to pay any other charges, in addition to the interest and other charges mentioned previously and, if so, the type of charges and how much you will have to pay.
  

If you apply for a variable-rate mortgage

If you apply for a variable-rate mortgage, your federally regulated bank, insurance company or trust and loan company must provide you with the following:

• 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 apply for a variable-rate mortgage and the amount of your mortgage payment is not adjusted automatically to reflect the changes in the annual interest rate that apply to each payment (in other words, if 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.

Information that must be provided in an information box at the beginning of your mortgage agreement

Once you have accepted the mortgage you will receive a mortgage, agreement. Regulations require important information to be provided in an information box at the beginning of the agreement. Here are some examples of the information that must be provided in an information box at the beginning of the mortgage agreement:

• Fixed loan agreement
  
  
• Variable loan agreement