Mortgage Security: Your Rights And Responsibilities
If you have successfully completed the paperwork to get a mortgage and have received your loan, congratulations are in order. Along with your mortgage come some rights and responsibilities, the knowledge of which is greatly helpful throughout the term of your loan till it is paid and settled completely.
What is Mortgage Security?
If you have taken or intend to take a mortgage loan, it is secured by immovable assets such as a house. This is done to secure the lender in case you fail to keep your end of the bargain of paying the loan on the terms against which you got the loan in the first place.
What are your mortgage security rights?
As a mortgage borrower, you have some rights which you should know. Those people who are members of the Canadian Bankers Association have voluntarily adopted what is known as 'Commitment to Provide Information on Mortgage Security'. This commitment makes it obligatory to provide information to the borrower. This information may be general information or specific information, which needs to be provided to the borrower before entering into a mortgage agreement or at the time of entering into the said agreement.
The general information is useful to the borrower in making a decision as it helps in understanding the key differences between the types of mortgage security that a bank takes towards the residential mortgage.
The contents of the general, as well as specific information, talk about:
· Terms of borrowing an additional sum
· Transfer of mortgage security to a new/different lender
· Discharging of the mortgage security
The mode of such communication by the bank should be very clear and not misleading in any way.
Responsibilities of the borrower
As a borrower of a mortgage loan you also have some duties towards the lender which you must know about. Before taking up a mortgage loan, look around for the various options available to you and most importantly inquire about 'how will the mortgage security be registered?' This could be as a collateral charge or a standard charge. Now, let us see what are these charges?
A Standard charge is a traditional charge and is also known as a conventional charge, non-collateral charge, traditional residential mortgage, deeds of hypothecary loan and retail mortgage, etc. It is also your responsibility to ask as many questions about the loan as it takes to answer all your doubts about mortgage security. The mode of registration of a charge can impact your final decision about taking up the loan as you would know the pros and cons of both kinds of charges. It will also help you pick what is best suited to your financial needs.
Also, take your time to read the mortgage agreement to understand fully, its terms as well as conditions related to mortgage security.
Moreover, you must know that the Financial Consumer Agency of Canada (FCAC) monitors the compliance of banks with the Commitment to Provide Information on Mortgage Security. If at any point, you feel, the bank has not adhered to the standard procedures towards its commitment, you could contact the FCAC.