When shopping for a mortgage, finding the best possible interest rate is probably your main concern. However, you should also be concerned about the mortgage the lender will ask you to sign.

Today, conventional mortgages are increasingly rare. Rather, financial institutions generally require the signature of a “mortgage guarantee” instrument. What is the difference?

In an act of “mortgage loan“, the secured debt is clearly identified, the amount of the mortgage is equal to the amount of the loan, the interest rate mentioned is that applicable to that loan, and all repayment terms are specified. When the loan is fully repaid, the mortgage can be written off.

In a “mortgage guarantee” act, the extent of debt that is secured by the mortgage can vary greatly from one financial institution to another. For example, it can guarantee repayment of all present and future debts to the lender. The amount of the mortgage is generally higher than the amount of the loan contracted at the time of its signature, the rate of interest referred to in the deed is higher than that negotiated for that loan, and the terms of repayment shall be the subject of a separate agreement. The mortgage does not extinguish as a result of repayment of any of your debts or even all of your debts to the creditor.

Bonds secured by the mortgage For example, a clause may provide that the mortgage guarantees all the borrower’s present debts to the financial institution and future debts if the borrower consents in writing. In another act, a clause may provide that the mortgage guarantees all present and future debts of the borrower and his spouse, his future spouse, etc. to the financial institution. The borrower therefore consents in advance to his current and future debts being secured by the mortgage, such as line of credit balances, personal loans, and even amounts owed as security. How do I choose?

There is a wide variety of acts. You have to make an informed choice and then ask yourself, every time you take out a loan or you post a bond, is what I have to pay off guaranteed by the mortgage on my house? You also need to know that it can be very difficult, depending on the scope of the guarantee, to give a second mortgage to a new lender or to transfer the mortgage to another financial institution. Before shopping for your loan or entering into a financing or refinancing agreement with a financial institution, consult your notary, a real estate specialist. It will provide you with all the useful information to choose the mortgage product that best meets your needs and projects, and will explain to you the main characteristics of the different collateral deeds and the extent of the bonds secured by the mortgage.

A credit tool


Mortgage security can be an interesting credit tool, but you have to understand the act and be careful. It allows to obtain new advances without having


à  sign a new mortgage. However, it is written to ensure that the mortgage guarantees the repayment of all these advances, and that is where we must remain vigilant.