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Banks maximizing mortgage penalties again… but there’s a bright side..

BankstersIn case you haven’t heard, Fixed rates are up around 0.50% over the last 3 weeks.  But the Banks haven’t increased their posted rates…  How can that be?? And how does that affect you?

The BIG SIX BANKS have played the rate guessing game for as long as I can remember..  This time, they’ve added another twist to ensure you will be paying those inflated penalties even longer..   By not increasing the posted rates, they ensure themselves any existing BANK customer will pay the same inflated penalties.

Look back to 5 years ago when fixed rate discounts we around 1.10% off Bank posted rates..  Now fast forward to May 2013.  Rate discounts reached an all-time high of 2.25%.  And whether it was by design or not, this inflated your penalty by the same margin.  (I’ll let you decide if this is just good old BANK luck… yeah, right.)

You see, if you took a BIG SIX BANK fixed rate mortgage, and you had to exit your mortgage early for any reason.. let’s say you to sell your home, or you had to refinance early, your penalty is calculated using whatever discount they gave you.  The bigger the discount, the bigger your penalty…get it?   Record level of discounting equals record level penalties…  click here to read more on how the penalties work. This is why you are seeing penalties in the $15,000, $20,000, $25,000 range and higher.

But now the bright side.  For those of us that still insist on getting a Fixed rate mortgage through the BIG SIX BANKS, these new rates will reduce the amount of your discount.  Which, in turn, reduces the amount of penalty.   It’s not much of bright side, but it’s something….. Maybe, this is the wake up call for loyal BIG SIX BANK customers…

Maybe this will make BANK customers think twice about just taking the BANK medicine… maybe they’ll get a second opinion from an unbiased Mortgage Expert…You don’t need to pay any form of inflated penalty.   There’s always been a better option.  I’m still amazed at how many consumers think their local BANK branch is the best option…   There are several other NON-BIG SIX BANK lenders offering superior mortgage products with superior terms and privileges including FAIR penalty calculations with incredibly competitive rates… usually better than the BIG SIX.

Take off the BANK handcuffs.   When and if you ever need to sell, or refinance, or exit your mortgage early, you won’t have to deal with these inflated penalties…  In other words, don’t put yourself in the position of being exposed to these crazy BANK penalties.   Speak with an experienced Mortgage Broker than can offer you options from a number of Lenders and Banks…

Your best interest is my only interest.

As always, I welcome your comments, calls and questions.

Steve Garganis 416 224 0114

Steve Garganis View All

As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.

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