Did you know that when a borrower tells a lender they are prepaying the full or partial amount owing on a mortgage, the lender must in writing provide the applicable prepayment charge along with a description of how the lender calculated the charge. This includes the amount owing on the mortgage, the annual interest rate, the comparison rate used for the calculation and the remaining term on the mortgage that was used for the calculation.
Over the past number of years, I have written numerous blogs about the exorbitant costs of mortgage penalties, which can reach in the tens of thousands of dollars. Doing your homework and being informed is a consumer’s greatest defence against future mortgage penalties.
No one knows for sure what the future may hold but if there is a chance you may wish to move, downsize, sell your home and travel? If that is the case, do not take a long term mortgage. These are the discussions you need to have with your mortgage agent.
Take this case of an Edmonton couple that was initially quoted $17,000 to break their five-year fixed mortgage early.
Many mortgage shoppers tend to put greater emphasis on finding the lowest rate, which may save more money up front but can potentially cost more over the long run. This is where a broker is very valuable, particularly for unexperienced buyers, as they can help find a suitable mortgage product that balances a competitive rate with the features and flexibility that are right for the buyer.
Colleen Saunders is a 20 year veteran in the mortgage industry, serving Oakville, Mississauga, Burlington and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.
To contact Colleen, please fill out the form on www.mortgagesbycolleen.ca or call 416-459-2406