Can a mortgage be changed by the insertion of a new interest rate?
Saskatchewan, Canada
The following excerpt is from Costa and Costa v. Co-operative Trust Company of Canada, 1983 CanLII 2010 (SK QB):
The defendant says that the parties, by mutual agreement, varied the original mortgage agreement. The mortgage agreement must now be considered to have been altered by the insertion of a new interest rate. The defendant says the variation occurred on October 26, 1981 when the plaintiffs returned the offer to renew the mortgage duly signed. And that it was only after the plaintiffs found they could obtain a lower rate of interest that they decided to pay out the defendant’s mortgage. A variation is a new contract and a contract can only come into existence if an intention to contract is present. To form a valid contract there must be an offer and acceptance, the presence of consideration and an intention to enter into legal relations. (See Esquimault v. Nanaimo Ry. v. A.G.B.C., 1949 CanLII 324 (UK JCPC), [1950] A.C. 87).
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