Using Mortagage Amortization Tables
According to the current state of the law in Ontario, lenders have no legal obligation to provide you with any type of statement of account - with two very limited exceptions. First, if the mortgage amortization schedule is in default, the lender must provide you with a written statement that details the amount in arrears. Also, if a mortgage is booked through a mortgage broker, it must provide you with the amortization schedule discussed below within 30 days of the funds being advanced.
Surprisingly, in all other cases - if you want to assume a mortgage, discharge a mortgage, or just get information about a mortgage - there is no automatic right entitling a borrower, or a new lender, to a mortgage statement. Virtually every lender will co-operate when a status update about a mortgage is needed. Still, the Ontario Law Reform Commission in its 1987 report on mortgages recommended that borrowers be entitled to one free statement of account annually, with any others to cost $25. But even the Law Reform Commission did not recommend that all lenders provide amortization schedules to their borrowers.
These "am" schedules (as they are often called) are tailor-made computerized print-outs that provide a detailed financial analysis of a mortgage. Most mortgages have blended payments, meaning the same amount is paid each time, the "mix" of principal and interest changing with each payment. Gradually the amount applied to interest falls, while the portion allocated to principal increases ever so slightly.
This shift is clearly shown on an "am" schedule. So, too, is the outstanding balance after each payment is made - the information you were seeking from your lender. An amortization schedule is the most important type of statement a borrower can get about a loan. To most people, the compound interest theory was a high school subject best left in the past. How, then, can the average Canadian really know how much is owing on their mortgage at any given time? To be frank, an annual statement containing lists of different numbers is most meaningless unless the borrower has something to compare it against for accuracy.
That "something" is an amortization schedule. Getting such a schedule is both easy and inexpensive. Some lawyers will order one when they complete a mortgage transaction for you. If yours didn't, then look in the Yellow Pages under the heading "Mortgage Amortization Schedules" and choose a company from the ones listed. The cost usually is about $10. Most companies are equipped to handle the fast-pay mortgage schemes - weekly, bi-weekly and semi-monthly, besides the traditional monthly payment.
Before ordering an amortization schedule, be sure you have the following information. If it's not readily available, call your lender to get it:
a) The amount owing on the mortgage after the most recent payment was made. Of course, this will be the amount borrowed for new mortgages;
b) The interest rate and how frequently it is calculated (semi-monthly is the norm, although some loans are calculated monthly);
c) The amount of the payment (principal and interest only). Ignore the tax portion of your payment;
d) How frequently the mortgage is paid (monthly, weekly, bi-weekly, semi-monthly);
e) Be sure the payment is blended, as is usually the case;
f) The date of the next payment (or the first payment for new mortgages).
By ordering an amortization schedule, you will have a yardstick against which to compare the information in that next annual statement (assuming your lender sends you one).
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