- A written request to your lender under the Mortgages Act can require a statement of principal or interest in default, the nature of the default and expenses incurred.
- The lender must respond within 15 days after receiving that request, or its enforcement rights can be suspended until it complies.
- Lenders cannot add unexplained fees to a discharge amount; the Ontario Court of Appeal has upheld disallowing unexplained professional and administrative fees.
- Most lenders do not send confirmation of payoff unless you ask, so request it early.
If you are selling or refinancing, your lawyer needs an exact figure to pay off your mortgage on the closing date. A rough balance from your online banking is not enough, because interest, fees and any charges owing on the closing date all affect the final number.
This article explains how to ask for a payout statement in Ontario, what it should contain, how the Mortgages Act timing rule works, and the errors worth watching for. It is general information, and your mortgage terms and the facts of your situation matter.
What a payout statement is and why you need it
A payout statement, sometimes called a payoff statement, is a document from your lender showing what it will accept to discharge the mortgage on a specific date. It generally breaks the amount down into principal, accrued interest and any charges. Your lawyer uses it to arrange the payment and to obtain the discharge from the lender.
Most lenders do not send confirmation of payoff unless asked. Because of that, it is sensible to request the figure as soon as you have a closing date, and again if the closing date moves, since interest accrues daily.
Your right to a written statement under the Mortgages Act
The Mortgages Act gives a borrower a formal tool. A mortgagor can give written notice requiring the mortgagee to provide a written statement of the principal or interest in default, the nature of the default and the amount of expenses necessarily incurred. This is in section 22(2), as described by the Ontario Court of Appeal.
The lender must respond within 15 days after receiving the request. If it fails to do so without reasonable excuse, or if the statement is incomplete or incorrect, its enforcement rights are suspended until it complies.
Be realistic about what this does. The suspension suspends the right to enforce; it does not remove the lender's substantive rights. A lender's non-compliance also does not invalidate a purchaser's title in a power of sale, and the borrower's remedy is against the mortgagee for an improper sale. The formal notice is most useful where there is a dispute about what is owing, rather than for an ordinary payoff figure. Beyond that 15-day rule, timing for an ordinary payout figure depends on the lender, so ask early and confirm the process with your lawyer.
What to ask for and what it should show
- The exact payout amount to a specified closing date, and the daily interest amount (per diem) if the date changes.
- The principal balance and the interest accrued to that date.
- Any discharge fee; federally regulated lenders must disclose the discharge fee in the mortgage contract, and fees range from no charge up to $400 where unregulated.
- Any prepayment charge; for federally regulated lenders this should be described in the information box in your mortgage agreement.
- Any other charges or expenses, each with an explanation of what it is for.
- Instructions on how and where to pay, and how the discharge will be delivered to your lawyer.
For context, a sample fixed-rate mortgage disclosure from the Financial Consumer Agency of Canada shows a prepayment penalty equal to the greater of three months' interest or the interest rate differential, a $50 default charge and a $40 returned-payment fee. Your own mortgage will have its own terms, so use your documents rather than that example.
Errors and extras to watch for
| What to check | Why it matters |
|---|---|
| Unexplained professional or administrative fees | The Ontario Court of Appeal upheld disallowance of unexplained fees added to a discharge amount, and said a lender must be able to justify its legal fees |
| Future interest after default | The standard charge acceleration clause lets a lender accelerate principal on default but does not entitle it to future, unearned interest; only interest accrued to the date of default |
| Late-payment charges | Substantiated late-payment charges that did not offend the Mortgages Act or Interest Act have been allowed, so ask for the basis |
| Prepayment charge calculation | Federally regulated lenders must describe how prepayment charges are calculated |
| Arrears at a higher rate | Interest on arrears cannot be at a higher rate than the rate on principal not in arrears |
If something looks wrong, raise it in writing before closing. A borrower can dispute fees in a court application, and the court has jurisdiction to decide whether added fees are legitimate. The Mortgages Act assessment mechanism is also referred to in the case law. Because closing deadlines are tight, tell your lawyer right away so they can advise you on how to resolve the figure.
What to do next
- Confirm your closing date and give it to your lawyer and lender in writing.
- Request the payout statement in writing, quoting your mortgage number, the closing date and a request for a per diem.
- If there is any default or dispute, ask your lawyer whether to send a formal written notice under the Mortgages Act.
- Diarize 15 days from the date the lender receives a formal request.
- Compare each line of the statement with your mortgage terms and ask for an explanation of any charge you do not recognize.
- Request an updated statement if the closing date changes.
Frequently asked questions
How long does a lender have to give me a payout statement?
For a formal written notice requiring a statement of default and expenses, the lender must respond within 15 days after receiving it. For an ordinary payout figure, timing depends on the lender, so it is wise to ask early.
Does the lender send a payout figure automatically?
Usually not. Most lenders do not send confirmation of payoff unless asked.
Can I challenge a fee on the statement?
Yes. The Ontario Court of Appeal upheld disallowing unexplained professional and administrative fees added to a discharge amount, and confirmed a court can decide whether added fees are legitimate. Speak to a lawyer before closing if a fee looks unjustified.
Can the lender charge interest for the rest of the term when I pay out?
Not on the basis of the standard charge acceleration clause alone. The Ontario Court of Appeal held that it lets a lender accelerate principal on default but does not entitle it to future unearned interest. Your specific mortgage terms and circumstances still matter.
Sources
- Interest Act, R.S.C. 1985, c. I-15 (Justice Laws) — Justice Laws (federal)
- Court of Appeal for Ontario – 2019 ONCA 273 — ontariocourts.ca
- Court of Appeal for Ontario – 2022 ONCA 621 — ontariocourts.ca
- Court of Appeal for Ontario – 2544176 Ontario Inc. v. 2394762 Ontario Inc., 2022 ONCA 529 — ontariocourts.ca
- FCAC – Information box example: fixed interest mortgage — canada.ca
- FCAC – Mortgage prepayment: know your rights — canada.ca
- FCAC – Discharging a mortgage — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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