Mortgage condition

[Talies R]

Is this a standard condition?


ABC Bank has the sole discretion to renew this mortgage at maturity for any term, with or without change in the interest rate payable under the Mortgage, by entering into one or more written agreements with the mortgagor(s).

[civicHB]

looks like it is

by entering into one or more written agreements with the mortgagor(s).


this condition means they need your signature at such a time.

[06civic]

Pretty much. If you are MIA at that time they will usually put you in a fixed open term. Its not like they just freeze it and wait till you come back....

[tpurcell4]

This is one of the many conditions designed to protect both you and the lender. This conditions is one that will allow borrowers not to go into foreclosure at the end of their term if they owe more than their house is currently valued at. As long as they have a good repayment history on the mortgage (typically no missed payments, but that is why this condition says "has the sole discretion to renew this mortgage"). It also says they can renew with or without change in the rate. This is why the use of a mortgage broker is highly recommended, even at renewal.

Banks and lenders do not make most of their money in the first term of the mortgage, they make it when they renew the borrower at the end of the term at a higher rate. Most non-bank lenders only have one rate, which means that the borrower can rest easy that they will be getting that lenders best advertised rate at maturity. But depending on how much volume a mortgage professional sends a lender they an typically get further discounts beyond the best advertised rate. Banks on the other hand have multiple rates they advertise, Posted Discounted ceiling and discounted floor. They will usually offer posted at renewal, or if they are being aggressive they may offer the discounted ceiling rate (typically about 0.15-0.25% above the floor rate), and then again, depending on the volume your mortgage professional sends, they may be able to get further discounts of the floor rate.

Using a broker at renewal can guarantee you get the best rate, and as long as you are not requesting new funds or making any changes this can be done without having to pay legal fees or for an appraisal, as brokers can transfer/switch your mortgage to a new lender who will cover these fees. That is except for a collateral mortgages. These mortgages are registered at 100% of the loan amount or up to 125% of the loan amount and cannot be switched or transferred without incurring any legal fees. A lender that puts a borrower into a collateral mortgage can offer the highest rate possible at renewal and if the borrower does not want to pay new legal fees they will have no bargaining power to get the best rate.

Banks offering collateral mortgages will sell the benefit of being able to refinance with the lender without question (if registered at 125%) because the lender has already registered this value on title. But the down side is giving up bargaining power and ability to secure best rates at maturity.