Brian Madigan LL.B., Broker
BRMadigan@iSourceRealEstate.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300
Toll Free: 1-888-507-0817

 

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Are Additional Late Charges, Bonus Interest, and Default fees Legal in a Mortgage?

February 5, 2016 - Updated: February 29, 2016

 

Mortgage Defaults and Additional Charges

 

Increasingly, we see pumped up interest charges, arrears payments, late charges and so on included in mortgage terms. These are well and above the mortgagees' incurred expenses associated with NSF charges.

 

Question:

 

Can you charge:

 

1) an increased rate of interest,

 

2) late payment charges, and

 

3) default fees,

 

when a mortgage goes into arrears?

 

Answer:

 

This matter recently went before the Ontario Court of Appeal for a determination, PARCEL v. Acquaviva (2015)

 

The answers by the Court were:

 

1)    No,

2)    No, and

3)    No.

 

Any such charges would constitute a penalty and would be prevented by the Interest Act as a penalty. That provision applies to mortgages. So, once a promissory note is secured by way of a mortgage on title, any of these provisions would become “void”.

 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


Tagged with: late charges. bonus interest default fees mortgage illegal interest act ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

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