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For Borrowers

[ Your Lawyer's Role | Helpful Hints | Glossary of Terms ]

Your Lawyer's Role

Whether you use a mortgage broker to help you refinance your home or you work directly with the lender, both the lender and the mortgage broker want to complete the loan for their own benefit.

Your lawyer is the only independent advisor and the only party involved who will work to protect your interest.

Your lawyer will go through the following with you:

  • The specifics of what you are borrowing;
  • The security that you are giving to the bank in exchange for borrowing the money;
  • The lender's Standard Charge Terms (including what the lender can do if you do not make your mortgage payments or other payments on time (e.g., condominium common expense payments, property tax payments); and
  • An explanation of what is currently on the title to your home.

You will sign all of the mortgage documents with the lawyer, including:

  • A Direction to the lender, instructing it where the money being loaned is to go (e.g., to pay creditors or all to your lawyer’s trust account);
  • The lender's Standard Charge Terms (in Ontario);
  • A title insurance Statutory Declaration;
  • An Acknowledgment & Direction (in many areas in Ontario) to permit the lawyer to register the mortgage electronically;
  • Where the lawyer represents you (the borrower) and the lender as well, an Acknowledgment of Conflict of Interest (this may be included in another document).

The lawyer will work to ensure that the old mortgage(s) get paid off from the money included in the new mortgage and, once they have been paid, she/he will ensure that the old mortgage(s) get discharged from the title to your property. This is a very important step! If the old mortgage does not get discharged appropriately, it will create difficulties when you try to sell your property in the future.

Your lawyer may also do a "legal check-up" with you to ensure that you have the following documents up-to-date:

  1. A will;
  2. Powers of Attorney;
  3. A living will; and
  4. Title insurance coverage, either from when you purchased your home, or if you did not get title insurance when you purchased your home, through a TitlePLUS OwnerEXPRESS® policy.

Before you sign your loan documents, get a TitlePLUS lawyer and...

1. Ensure that you understand the documents that you are signing

 

 

  • Can you pay off some or all of the money owing under the mortgage before the end of the term without a penalty?

  • Have all previous paid-off mortgages been properly discharged and who is looking after discharging the mortgage, if any, being paid off now? The lender or your lawyer?

  • What can the lender do if you do not make your mortgage payments on time? Can you be sued in addition to the lender taking the property?

  • Does the mortgage prevent you from renting out the property?

  • Where you are getting an additional loan, is the lender going to register a collateral mortgage against the title to your home to secure the line of credit it is setting up for you?

  • If the interest rate is variable, but the monthly payments are a fixed amount, can you end up owing more principal at the end of the year?

  • How much indebtedness is being secured (or bound) by the mortgage? Is it just this loan or everything your spouse or you (jointly or individually) may ever owe this lender (e.g., credit card debt)?

 

 

 

 

Your TitlePLUS lawyer can answer all of these questions and more before you sign the mortgage documents to protect you and make sure that you understand what your new mortgage loan means.

  • EXAMPLE: You signed all of your mortgage documents at the bank without consulting a lawyer.
    A couple of years later, you inherit a sum of money and decide to use it to pay off your mortgage. You are surprised to discover that there is a large penalty to pay off the mortgage early.

Before you sign any mortgage documents, your TitlePLUS lawyer can make sure that you understand the terms of your mortgage, such as whether or not you can prepay some or all of your mortgage balance before the end of the mortgage term.


2. Decide if tax advice is needed

 

  • EXAMPLE: The lender requires that your parent be a co-owner of the house, not just a guarantor of the mortgage. This can have negative tax consequences that need to be discussed in advance.

3. Avoid nasty surprises

 

 

  • EXAMPLE: Before you finalize your new mortgage, you consult your TitlePLUS lawyer. He/she advises you that the mortgage prohibits you from renting part or all of your home to tenants without the lender’s consent. Since you are planning to rent your house to tenants while you travel for a year, you know to obtain the consent of the bank before doing so.

  • EXAMPLE: You consult your TitlePLUS lawyer before you refinance your house. He/she assists you with the process and explains all documents to you. He/she discovers that the mortgage from the two owners before you has not been cleared from title (discharged). Your TitlePLUS lawyer gets this problem fixed, so that it will not cause any disruptions when you refinance again or sell the house.

4. Reconsider your protection in case of fraud

 

 

  • When you refinance your home, the lender gets a title insurance policy, but only the lender is covered by this policy. One of the things that the title insurance policy covers is fraud. If you did not get a title insurance policy when you bought your home, you can obtain a TitlePLUS OwnerEXPRESS® policy with the assistance of your TitlePLUS lawyer, to give you solid financial protection in case your property is the target of a fraudster in the future.

 

  • EXAMPLE: Without your knowledge, it is possible for a fraudster to transfer title of your home into his/her name. Once done, the fraudster could potentially borrow a substantial sum of money from a lender on the security of a new mortgage on your home! The TitlePLUS OwnerEXPRESS policy will compensate you if you suffer a loss because someone (e.g., a lender) claims such an interest in your property. Under the TitlePLUS policy, you will also be eligible for legal assistance in restoring the title (ownership) to your name, where an administrative or Court proceeding is advisable. Please refer to the TitlePLUS policy for full details, including actual terms and conditions.


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Underwritten by Lawyers' Professional Indemnity Company. Contact us for brokers in Manitoba, Alberta and Québec.
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