When you are selling your property, the Notary must pay and close your mortgage. You are required to sell your property free and clear of any mortgages or liens which may affect your purchaser’s ownership title.
When paying and closing your mortgage, the amount of the cheque sent by the Notary differs slightly compared to the balance you see on your account.
To have the accurate amount for reimbursement, the Notary requests an official payout statement from your financial institution. When they do this, it is possible that your account becomes frozen as they anticipate a full reimbursement. If there is a line of credit attached to your mortgage, this too will be reimbursed and closed. The financial institution adds the line of credit amount to the mortgage amount on the payout statement.
The Notary sends a cheque to your financial institution with the full reimbursement amount, including any penalties incurred as well as any daily interest imposed by your financial institution. These elements account for the difference between the reimbursement amount and the amount which you see on your mortgage balance.
Penalties are imposed by the financial institution when you close your mortgage before the end of your term.
Daily interest is also added by the Notary. The payout statement indicates a daily amount required and indicates the date from which daily interest must be added. The Notary normally adds approximately three weeks worth of daily interest as of the date of the signing of the deed of sale. This accounts for the delays for the publication of the deed of sale at the land registry, as well as the preparing, the posting, the reception, and the processing of the cheque by your financial institution. Any amount received in surplus is reimbursed to you directly by your financial institution.
Consider this example:
Your account shows a balance of 300,000.00$ owing on your mortgage loan.
The payout statement indicates that a balance of 305,000.00$ is owed and should be reimbursed on January 8th. If the payment is received after January 8th, they indicate that a daily interest of 15.00$ per day should be added to the payment amount.
Your closing date is January 10th.
23 days of daily interest should be added. Three weeks = 21 days. From January 8th to January 10th, we count 2 days. 21 days + 2 days = 23 days.
300,000.00$ + 5,000.00$ + (15.00$ x 23 days) = 305,345.00$
The Notary sends the financial institution a cheque in the amount of 305,345.00$.