Mortgages in B.C. may be “open” or “closed”, with “fixed” or “variable” interest rates. An open mortgage is one that can be paid down, in full, or in part, without an early prepayment penalty being assessed. A closed mortgage is one that will have limited rights of prepayment and prepayment in excess of this limit will trigger a penalty of typically 3 to 6 months interest or an interest rate differential.
Mortgages in B.C. usually have terms of 6 months to 5 years. A fixed interest rate mortgage will have the same interest rate during the term. Closed mortgages may be paid off without penalty at the end of the term. Mort-gages are usually renewed, with new interest rates, by letter agreement with the financial institution near the end of each term.
In B.C., one lawyer may represent both the lender and the borrower in a mortgage transaction if the parties con-sent, the lender is a financial institution and the mortgage is simple. The advantage to the purchaser is a saving in legal fees and disbursements. Some financial institutions will not consent to one lawyer representing both parties. Mortgages where title is held in a complicated manner, such as a company holding in trust, will prevent one lawyer from representing both parties.
Mortgage documentation must be original and executed before a Notary Public. In many jurisdictions, lawyers are also Notaries Public, but this is not true of all jurisdictions. Non-resident purchasers may wish to consider making a limited power of attorney before leaving the area to deal with this issue. Improperly completed mortgage documentation from non-residents is a frequent problem requiring postponements of completion dates. Purchasers requesting extensions of completion risk being sued by the vendor and losing the property.
