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In an ever-changing lending market, especially for residential mortgages at this time, it very important to discuss certain points with your mortgage broker and/or mortgage lender prior to signing a mortgage commitment so that you put yourself at an advantage as much as possible during the term of your mortgage loan.

Some of these items include but are not limited to the following:

• Right of prepayment(s): Always find out what right of prepayment(s) if any, you will have during the term of the mortgage loan. For example, are you allowed to double up on your regular payment anytime during the term of the mortgage loan? If so, is it limited to a certain number of times per year?Are you allowed to prepay a certain percentage of the overall original mortgage loan principal(for example 10%; 15%; or 20%), each year of the mortgage loan term on top of your regular mortgage payments?

• Open term vs. closed term: It is very vital to know ahead of time, if your mortgage loan is a fully open loan, in which you may prepay the entire outstanding loan at anytime during the mortgage loan term without the requirement of providing the mortgage lender any prior notice and without any payment of a prepayment penalty for breaking the term of the mortgage loan prior to its maturity OR if your mortgage loan is a closed loan, in which you may have to provide the mortgage lender with a notice of at least a certain number of days (for example 30 days; 60 days; or 90 days) and have to pay interest equivalent to a certain number of months (for example 1 month; 2 months; or 3 months) in order to break the term of the mortgage loan prior to its maturity.

• Right to register any subsequent encumbrance(s) on title: Check to see if any notice has to be given to the mortgage lender and/or if their consent in writing is required before any subsequent encumbrance(s) may be registered on title to the property, especially for any subsequent mortgages and/or secured line of credits as not obtaining such consent from the mortgage lender may result in an automatic default of the mortgage loan.

The cost incurred because of overlooking these items can add up to thousands of dollars. As such it is strongly recommended that these issues be discussed prior to signing a mortgage commitment.

For more information about this topic, please feel free to contact one of our lawyers! Email us at info@kormans.ca or call (905) 270-6660.

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Taimoor Qureshi is an Associate Lawyer at Kormans LLP. You can reach Taimoor anytime at tqureshi@kormans.ca.

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