An annual amount repayable without charge
A permitted increase in the regular payment
A penalty on anything beyond that
Portability
Some loans follow the borrower to another property. Rate and term stay the same.
Prepayment
- An annual amount repayable without charge
- A permitted increase in the regular payment
- A penalty on anything beyond that
Where to read these clauses
They appear in the financing offer. Ask for them before signing, not after.
Conditions for a transfer
- A short gap between the two transactions
- A new property judged acceptable
- An equal or higher amount, topped up if needed
- A fresh review of your request
Usual privileges
Many contracts allow repaying ten to twenty percent a year.
The privilege is lost if unused within the year.
In a sale
If the buyer assumes your loan, the penalty disappears. The lender must approve the buyer.
Using the privilege each year
An extra payment reduces principal directly.
Done annually, it shortens the amortization by several years.
Check the deadline: the privilege runs by calendar year.
Checking before signing
These clauses appear in the financing offer, not in the advertising.
Ask for the full document before committing.
A flexible loan is sometimes worth a few basis points more.
