Borrowing against your home is a big decision, and the best protection is asking the right questions before you sign. Use this checklist with your lender, your broker and your lawyer.
Questions to ask yourself
- What exactly is this money for, and is borrowing against my home the best way to pay for it?
- How much do I really need, and could I borrow less?
- Can I comfortably afford the payment, even if my income dips or rates rise?
- How much equity will I have left afterwards? See how much equity you need.
- What’s my plan at the end of the term?
Questions to ask the lender or broker
- What type of lender is this, and why is it the right fit? See who offers equity mortgages.
- Could a bank or credit union approve me instead?
- What’s the interest rate, and is it fixed or variable?
- What is every fee, in dollars, and how is each one paid?
- What’s the total cost over the full term? See what equity mortgages cost.
- How much will I actually receive after fees and payouts?
- What are the prepayment terms and penalties?
- What happens at renewal, and what will it cost?
- What happens if I miss a payment?
- Are you licensed with the Real Estate Council of Alberta (RECA)?
Questions to ask your lawyer
- Have you explained every clause I’m signing?
- Are there any terms that are unusual or that I should worry about?
- What happens if I want to sell before the term ends?
- Is anything being registered against my home besides this mortgage?
Warning signs
- Pressure to sign quickly or skip legal advice
- Large fees requested before you have a written approval
- Fees or terms that change at the last minute
- Any request to transfer ownership of your home
See the risks of borrowing against your home.
Take the time you need
A good lender and broker will answer every question clearly and won’t rush you. For quick answers to common questions, see the equity mortgage FAQ.
This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.