In its recent economic statement, Ottawa unveiled a “mortgage charter” containing rules that banks will have to follow to help holders of subprime mortgages.
• Read also: Towards a drop in interest rates “faster” than expected, says a renowned economist
• Read also: After mortgages, car loans weigh down Quebec households
• Read also: More advantageous to buy or rent your home?
Most of the “rules and expectations” contained in the charter already exist, but the federal government wants to highlight them to help consumers better understand their options.
One new thing, however: Ottawa is asking financial institutions to no longer require that a borrower pass a “stress test” when he has an insured mortgage loan maturing and wishes to change financial institution. During these tests, the bank verifies whether you are eligible for a loan by adding a percentage (2%) to the proposed mortgage rate.
Also, the charter states that Canadians can expect financial institutions to:
- allow temporary extensions of the amortization period for subprime mortgage holders;
- waive fees and costs that would otherwise have been charged for the relief measures;
- contact homeowners four to six months before their mortgage renewal to inform them of their renewal options;
- give at-risk homeowners the option to make lump sum payments to avoid negative depreciation or sell their primary residence without prepayment penalties;
- do not charge interest on interest in the event that mortgage relief measures result in a temporary period of negative amortization.
See also:
2023-11-24 21:21:49
#charter #mortgage #borrowers
