The mortgage company calculated our biweekly payments based on monthly payments…?
My wife owned our home prior to our marriage. Just recently we have been talking about moving to a larger home so I started looking at our financial status. I started with trying to figure out the amount left on the current mortgage but ran into a little problem. It appears that the mortgage company created our mortgage by taking a 25 year amortization based on monthly payments, then halving the monthly payments to make the biweekly payments we have been paying. I know that it thus creates an incorrect calculation for a payment monthly of 840 is equal to 10080 and the actual payment of 420 biweekly equals 10920 a year! The payments calculated do not fit the information laid out in the loan papers.
My questions, keeping in mind that we are in Ontario, Canada is:
1 – What recourse do we have against the lender for making such an error?
2 – What options legally do we have against the lender for making calculation errors like this on official documents.
They haven’t necessarily made an error. Many financial institutions recommend doing exactly that so that you end up making 1 full month’s payment extra each year in order to pay down the mortgage faster. The extra $840 goes all to the principle.
Usually, in the discussions with the lender as to whether to make monthly or bi-weekly payments, this scenario is discussed. And there is usually something in the “fine print” that outlines how the bi-weekly payments work.
You basically have no recourse – unless the extra payment did not go to the principle. Assuming it did, you have no loss to make a claim for.
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