Shopping for a mortgage loan can be a frustrating task owing to the wide variety of products available and the complicated processes. Most borrowers do not have expert knowledge of the various loan products and could be misled into getting a loan that is not really as attractive as it initially appears to be. Before you approach a mortgage lender for your loan, it is important to have a good understanding about your rights as a borrower. This will help you ask for the right information and disclosures from the lender, preventing any miscommunications- inadvertent or deliberate, that can hike the cost of the loan or make it unmanageable in other ways.

Discuss the loan in detail

Carefully read through your entire mortgage agreement and clarify all the points that you do not understand. Do not settle for brush-offs from your mortgage lender. Ask him to explain each point until you know exactly what the agreement entails.

Loan details

Your lender should give you a detailed description of the loan he is recommending. This description should contain the basic details like principal amount, interest rate, repayment schedule and amortization term. In addition any fees, prepayment penalty/ privilege must also be mentioned clearly in the document. He should provide details of how much exactly you would have paid in principal and interest at the end of the loan term.

Avoid add-on products

Many lenders coax you into buying other financial products as a condition for approving mortgage loans. They may insist that you consider their insurance policy or buy their mutual funds before your loan is approved. Lenders approved and regulated by the FCAC, such as banks and many loan companies, are forbidden from making the purchase of other products a condition for loan approval. If your lender is coercing you to do this, you can report him to the FCAC. You may also be able to request intervention from provincial regulatory bodies such as listed here

Document all the terms and conditions

You have a right to ask the lender to give all his commitments in writing. When you get the loan document make sure it contains all the points discussed with the lender and nothing more or less. If you are not happy about the loan document or cannot decipher it, ask for the opinion of a lawyer who specializes in real estate documents. Else take advice from a knowledgeable friend or relative during the loan process.

Don’t get pressurized

Your lender may tell you that the attractive loan he is offering is available for a short period only. In most cases this is a ploy to get you to sign the documents quickly. Most mortgage lenders do this with the aim of finalizing as many loans as possible in the shortest time. But a few unscrupulous ones may have some hidden clauses/ fees in the loan document that you cannot spot unless you read through it in detail. Giving in to the lender’s pressure tactics can prove very costly in these cases. Simply tell the mortgage lender that he should give you the same attractive rate after a reasonable time to fully read and understand the documents. Or just find another lender who is willing to let you take your time to understand the terms and conditions of your mortgage.

Author Bio: For more information on mortgage lenders orhome equity loans, contact Canadian Mortgages Inc. Visit http://www.canadianmortgagesinc.ca/second_mortgage/ to get a second mortgage on your home.

Category: Finances
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