We all dream of having our own home, but sometimes the financial situation does not allow us to fulfill this dream. At other times, there are certain unforeseen situations or the desire for change that push us to make decisions that inevitably have a financial component. Then, comes the idea of a mortgage loan.
But what exactly is a mortgage?
A mortgage is a relationship between the owner of a property (the debtor) and another party (often a bank) acting as a creditor, that is, a lender. The debtor receives a certain amount of money and undertakes to reimburse it, guaranteeing the fulfillment of his obligation with his property. The property will therefore become mortgaged/hypothecated.
Any real estate mortgage is created in a notary deed. It is the notary who draws up this document which necessarily includes the description of the hypothecated/mortgaged property, the rights and obligations of the parties involved and the amount of money to which the mortgage relates.
This amount of money is the maximum that the creditor will have the right to recover under the mortgage. What should be known is the fact that it is generally higher than the amount borrowed by the debtor, because the creditor at the same time will also provide for interest or various costs such as the costs of seizure or sale of the real estate encumbered by the mortgage.
In case the debtor does not repay the necessary amount of money, the creditor will have, in accordance with the mortgage, for example, the right to sell the property of the latter (or to have it sold by the Court) in order to be able to recover the amount of money that the debtor owes him. This is an expensive procedure hence the final amount of the loan must be repaid. The creditor may also exercise the hypothecary remedies provided for in the Civil Code of Quebec.
As a debtor, you will receive an amount of money and you will have to repay the entire amount in the required steps and timeframes, and also comply with various conditions that you have established regarding the property (for example, maintaining your insured property and so on). If you are unable to fulfill your obligations, you will leave the creditor the freedom to enjoy your rights to your property.
You understand the value and the risks of such a situation and also the importance of getting legal counselling along the process or in case of litigation.
Mtre Leopold Lincà, notary Montreal, will be pleased to explain the steps involved in obtaining a mortgage credit and to protect you in case of unexpected events.Contact us now!