Canadian homeowners with a mortgage and thinking of breaking their mortgage or making prepayment charges now have new ways to find out about prepayment charges. On March 7, 2014, a news release was issued by the Financial Consumer Agency of Canada stating "Quicker access to information will help consumers who are making mortgage prepayment decisions".
The Voluntary Code of Conduct on mortgage prepayment was enhanced for information disclosed to consumers by their financial institution, while raising their awareness of any obligations or penalties they might incur when repaying their mortgages more quickly. This Code is monitored by FCAC and will go a long way in helping consumers manage one of the biggest financial decisions of their lives.
Lenders who adopt the code will now make available toll-free telephone access, where knowledgeable staff will be able to provide borrowers with the actual prepayment charges at the time of the call and upon request, provide a written statement showing the amount of the charges. In addition said lender will provide consumers with information about factors that affect mortgage prepayment charges, online financial calculators and certain other information annually. Consumers who confirm they will be making a prepayment that will result in a prepayment charge can receive a written statement.
If you are looking to pay off your mortgage quicker, your agreement may already include prepayment privileges without triggering any prepayment charges, but if you don't have that in your agreement, prepaying more than the contract allows, or breaking the mortgage as you found best mortgage rates, can result in prepayment charges that could cost thousands of dollars. Before you think of making any changes to your mortgage or mortgage payments, contact your mortgage broker or lender.
If you are a first time homebuyer looking for a mortgage, speak to the mortgage broker and find out if the lender adopts this code and all information about prepayment mortgage charges and penalties should you decide to break a mortgage.
Established in 2001, the Financial Consumer Agency of Canada (FCAC) to consolidate and strengthen oversight of consumer protection measures in the federally regulated financial sector, and to expand consumer education. The FCAC informs Canadians about their rights and responsibilities when dealing with banks and federally regulated trust, loan and insurance companies.