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Beware of those so-called 'SPECIAL OFFERS' from your Banker or Mortgage Lender

STOP Beware of Special Offers

Stop… don’t sign any mortgage renewal, refinance or other mortgage offer from your banker. It is important to remember that they are not your friend. They are employees of a huge corporation paid to push you into the most profitable product for the bank.  

Here’s what you need to know…

We are in a rare time in history.  Fixed mortgage rates have tumbled to historical lows.  Variable rates will follow almost certainly. It is time for action.


This has been my go-to product for decades. but over the last 4 years, it was difficult to recommend this product as the rate spread was under 0.50% compared to fixed rates when it is normally at least 0.50% to 2.00%.  That’s about to change. With the Bank of Canada cutting rates by a highly irregular 0.50% on March 3rd, followed by another rate cut on March 13th, it sent a clear message that the government is worried about or economy. And it’s not done yet… we can expect another series of cuts. Wow.. unbelievable. All due to a number of factors. Gas pipelines being cancelled, blockades, an already slowing global economy, and now the highly contagious coronavirus spreading worldwide causing everything to grind to a halt. 

What should you do?   It’s time to review your own mortgage to see if there are any potential savings to be had.  

In 2015 and 2009, I issued the warning to beware of a call from your bank as they were calling up clients and offering so-called special rates. Meanwhile, we all knew rates were on their way down, not up.. And those that jumped at the bank’s offer, discovered they acted prematurely.  

Variable-rate is going to look like the winning product for those that don’t mind some rate fluctuation but could possibly save some money with lower rates as has been proven over the course of history.

The strategy right now is to get a variable rate approval while the variable rate products are priced attractively. As the bank prime rate drops we are going to see the variable rate pricing shrink. It will drop down from our current prime minus 1.1% probably down to about prime minus 0.50% or lower.  This is the pattern that we’ve seen more than once. We should expect that will happen again. This is your warning call.


If you can’t sleep at night because you just need to know what your rate is, then fixed could be the right choice for you. But be careful, choosing the wrong fixed-rate product or the wrong financial institution could end up costing you a huge penalty down the road. Back in 2009 and 2010 we started seeing mortgage penalties climb to levels we’ve never seen before even though interest rates were dropping to their lowest levels. That’s because mortgage penalties are based on a discount that you received from the bank on your mortgage. We were seeing penalties increase from $5,000 to $10,000 to $20,000 to $30,000 even up to $40,000. Yes, you heard me right. But hold on. Not all mortgages are alike. And not all financial institutions are alike. Your penalty calculation can vary greatly. Before you choose a mortgage make sure you understand how your penalties calculated


 So what should you do? You need to get your mortgage reviewed sometimes, and this is one of those times. It can pay to break your mortgage, pay the penalty and enjoy the savings. One of the biggest victories I ever had for a client was in 2015. When a client pay the penalty of $6300 but save a net $26,000 over the course of their five-year term. We are in that environment once again.

Don’t wait. Get a quick review from our team. Let’s see if there are any savings to be had. There’s nothing to lose but everything the game. It doesn’t cost us anything except for a little time.

Your best interest is my only interest.

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

Steve Garganis 416 224 0114


Mortgage News

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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