The commitment is a contract between First National and the Borrower. First National uses this commitment as the source for all decision making throughout the duration of the mortgage amortization period. The commitment covers everything from payment
type (fixed, floating, amortizing, interest only), pre-payment parameters, insurance requirements, type of annual review documents to be collected, undertaking requirements, etc.
Why is it important?
It is important to note that the commitment is attached to the mortgage (rather than the borrower) for the entire amortization period.
- If the loan is assumed the current Borrower is replaced by the Purchaser of the property.
- If the loan is renewed the terms and conditions of the commitment are extended for a new term in accordance with the renewal agreement.
- If the loan is refinanced the terms of the existing commitment is discharged and new terms are registered with the mortgage.