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Brian Madigan LL.B., Broker

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

96 Rexdale Blvd. 
Toronto, Ontario 

Phone: 416-745-2300

Cell: 647-404-8150 
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.




Can you charge:


1) an increased rate of interest,


2) late payment charges, and


3) default fees,


when a mortgage goes into arrears?




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

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,

Phone: 416-745-2300

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