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Mortgage

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Mortgage - Cubelaw

Mortgage

When purchasing real estate, a common way to obtain financing is through a mortgage. This involves transferring an interest in the land to a mortgagee, typically a financial institution, as security for a loan or other obligation. The party transferring the interest, known as the mortgagor, agrees to make payments in installments that include both interest and a portion of the borrowed principal amount. The Lender that provides the money is called the mortgagee.

However, if the mortgagor fails to make payments, the mortgagee may initiate foreclosure proceedings. This allows the Lender to declare the entire mortgage debt as immediately due and payable through an acceleration clause in the mortgage. If the debt is still not paid, the security interest may be seized and sold to pay off the remaining mortgage debt.

The foreclosure process varies depending on local provincial law giving the mortgagee power to sell the property.

Frequently Asked Questions

Refinancing can lower interest rates, reduce monthly payments, or change loan terms to better suit your current financial situation. Please work with your mortgage broker to evaluate your situation.

Consider current interest rates, the remaining duration of your mortgage, closing costs, and how long you plan to stay in the property. Please work with your mortgage broker to evaluate your situation.

The process includes reviewing bank instructions, registering the new mortgage on the title, removing the old mortgage from the title, and distributing any net proceeds to you, if applicable.

A prepayment penalty is a fee charged by lenders if you pay off your mortgage earlier than the terms specified in the mortgage agreement. This penalty often applies if you refinance your mortgage, sell your property and pay off your mortgage with the proceeds, or make a large lump sum payment beyond the allowed prepayment terms.


The calculation of a prepayment penalty varies depending on the lender and the type of mortgage you have. It’s commonly based on several months’ interest, a percentage of the outstanding principal, or the difference between the interest you would have paid and the current interest rate. It’s important to check your mortgage agreement for specific details or consult with your lender for precise calculations.

Avoiding a prepayment penalty may be possible if your mortgage agreement includes terms that allow penalty-free prepayments up to a certain amount. To reduce the penalty, consider only prepaying within the allowed limit. Additionally, if you plan to buy a new property, transferring (porting) your mortgage to the new property can sometimes help avoid these penalties.

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