Did you know that when you get a mortgage from a bank, they give you a discounted interest rate but if you need to pay off the mortgage before the maturity date, you also have to refund them the difference in the interest rates?  If your rate was discounted by, say, 2%, you have to pay your penalty on the highest rate.  I deal with a number of lenders that the rate quoted is their actual rate.  If you need to pay back the mortgage before maturity, your penalty is calculated on this lower rate because it is the actual lowest rate.  It’s not all about the interest rate, there are so many other considerations.

There has been a lot of talk lately about On Line Mortgage Applications and a few of the big banks already have the programs available.  By using this technology and eliminating ‘people’ from the transaction, you would never learn about situations like the one I mentioned above.  The banks are happy that you be enticed just by interest rates.

The other disadvantage of not dealing with a human being is without discussing your mortgage requirements and the paperwork with an individual, the bank may say “you didn’t tell us about this or you didn’t reveal that” and your mortgage doesn’t get processed.  This would be a major issue if you are purchasing a home and the financing doesn’t go through and now you have to scramble to find a mortgage because you waived the Condition on Financing and could be sued.

I have seen it many times and somehow it is always the customers mistake!  I can’t even imagine the misunderstandings if everything were done on line without individual input or explanation.  What do you think?

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