Bill C-459: An Act to amend the Interest Act (prepayment charge)

Bill C-459 If you have any questions or comments regarding the accessibility of this publication, please contact us at [email protected]. First Reading LEGISinfo Bilingual view XML PDF Skip to Document Navigation Skip to Document Content ENGLISHCoverCoverSummarySummaryBILL C-459BILL C-459SUMMARYSUMMARY First Session, Forty-second Parliament, 64-65-66-67-68 Elizabeth II, 2015-2016-2017-2018-2019 HOUSE OF COMMONS OF CANADA BILL C-459 An Act to amend the Interest Act (prepayment charge) FIRST READING, June 14, 2019 Mr. Caron 421610 SUMMARY This enactment amends the Interest Act in order to set out the maximum charge that a lender can exact for prepayment of a loan secured by a first mortgage or hypothec on property that is used as a primary residence. It also sets out the circumstances in which such a charge must not be exacted. Available on the House of Commons website at the following address: www.ourcommons.ca 1st Session, 42nd Parliament, 64-65-66-67-68 Elizabeth II, 2015-2016-2017-2018-2019 HOUSE OF COMMONS OF CANADA BILL C-459 An Act to amend the Interest Act (prepayment charge) R.‍S.‍, c. I-15 Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: 1 The Interest Act is amended by adding the following after section 10: Prepayment charge 11 (1) If any principal money or interest is secured by a first mortgage on real property or a first hypothec on immovables used as a primary residence and under the terms of the mortgage or hypothec, the lender may, in the case of prepayment, exact a charge in respect of interest accruing, then (a) that charge shall not exceed the lesser of the following amounts: (i) an amount equal to three months interest on the outstanding principal calculated at the average rate provided for in the mortgage or hypothec, and (ii) an amount equal to the balance of the interest otherwise payable on the outstanding principal under the terms of the mortgage or hypothec; and (b) no charge shall be exacted if the prepayment is made as the result of the sale of the property used as a primary residence following (i) the workplace relocation or forced termination of the borrower or the borrower’s spouse, (ii) the serious illness or death of the borrower or the borrower’s spouse, or (iii) the separation or divorce of the borrower and the borrower’s spouse. Deduction — calculation of charges (2) When calculating the charge in respect of interest accruing, any amount that the borrower is entitled to repay annually without penalty under the terms of the mortgage or hypothec must be deducted from the outstanding principal. Regulations (3) The Governor in Council may make regulations defining any term for the purposes of this section. Published under authority of the Speaker of the House of Commons Publication Explorer Publication Explorer ParlVU