In February, the Federal government announced many changes to tighten mortgage lending policies to ensure Canadians don’t get in over their head when it comes to mortgages.. they also promised to STANDARDIZE Mortgage Penalties… well, we have not seen or heard anything about it… Come on Feds, make the change… Canadians need your help..
Last week someone sent me this mobile pic from just outside a Scotiabank branch.. We couldn’t help but find the ad amusing… In case you can’t read it.. “Penalty & fees have you upset? No respect? Get service and advice worth switching for”.…
Well Scotiabank, speaking on behalf of all Canadian borrowers for just a minute, the answer is YES… we are upset.. so what are you going to do about it?
Pause… wait… I don’ t hear anything… Just what I thought.. nothing..
We found the arrogance disturbing. Scotiabank is no different than any of the other major bank when it comes to calculating their prepayment penalties…and in fact, I have more than a few clients that will get quite upset after seeing this.
You see, they are part of a long list of Mortgage Borrowers that found out, the hard way, that mortgage prepayment penalties can be extremely high… 6%, 7% and sometimes 10% of the outstanding mortgage balance… Here’s a good example from a Bank of Montreal client… this article was written in Ellen Roseman’s Blog… Her reader is quoting a $30,000 penalty on a $360,000 mortgage with 2 years remaining…
Think you are immune? Well, if you are in a fixed rate mortgage, then I’ve got news for you.. you are susceptible to the same outrageous penalties if you take any fixed rate mortgage. The Banks are selling 5 year Fixed rate mortgages as getting ‘peace of mind’ and protection from potential rate increases…. And yet, study after study has proven that SHORT term and VARIABLE rate mortgages outperform any fixed rate..
Make an informed decision, stay alert and make sure you know what you are getting into when choosing a FIXED rate mortgage… Feel free to contact me anytime for my advice or opinions.