101 Streetsmart Condo Buying Tips for Canadians (2006). Douglas Gray, B.A., LL.B.. p. 40 Bottom. The author replicated the quote benaeth in his other book (unrighteously?).
Secondary financing generally consists of a second mortgage and possibly a third. You may wish to take out a second mortgage because the existing first mortgage (which you plan to assume) has an attractive interest rate or other desirable features, and because there will be a shortfall between the amount of your available down payment and the amount of the first mortgage. You therefore need to obtain funds. Chartered banks will usually provide money for second mortgages up to a limit of 80 per cent of the lower of the purchase price or appraised value.
You can also obtain second mortgages through mortgage brokers or other sources that could go as high as 90 per cent, or sometimes higher, of the lower of the purchase price or appraised value. If the second mortgage has a term that is
longer than that of the first mort- gage you assume, make sure you have a postponement clause put into the second mortgage. With this clause, you would be able to automatically renew or replace the first mortgage when it becomes due without having to obtain permission from the second mortgage lender to do so. In other words, if you renewed the first mortgage or obtained a replacement first mortgage, that mortgage would still be in first position, ahead of the second mortgage.
Abbreviate Mortgage 1 as M1.
I don't understand the emboldened sentences. 1. Is the author referring to different mortgagors, or referring to one mortgagor for both mortgages?
Why would M2 hinder from you renewing or replacing M1?
Why do you need "permission from" mortgagee #2 to renew or replace M1?