Another example of BIG SIX BANK inflated penalty calculation.. $13,634.00! Wow!

big-six-banks1 If you still think your local BANK is your best friend, think again.  Last week, one of my client’s discovered it would cost them $13,634 to exit their mortgage early.  Compared with only $2736 if they had chosen a BETTER mortgage Lender.

Here’s the details..  The clients had a $395,000 mortgage balance remaining.  Renewal date was October 2018.  Original term was 5 yrs and their rate was 2.77%.  The rate is competitive, but not any better than what I could have offered at that time.  There had to pay the mortgage out.

Penalty quote is $13,634.  That’s equal to over 14 months interest!!  Wow!  Incredible.   $13,634 compared to $2736.

I’ve shared many examples similar to this in the past.  It’s really simple.  DON’T FOCUS ON THE RATE!.   There is so much more to choosing a mortgage than just rate.  The average Canadian changes their mortgage ever 3 years.  And there are many reason this happens.. change of job, marital status, family issues, health issues, etc.

And if you are expecting your Banker to show you other products to compare, well, that’s just not gonna happen.  It’s like expecting Ford to send you to Toyota for a new car.  Not gonna happen. Do yourself a favour and speak with an unbiased, neutral professional. Speak with an experienced Mortgage Broker that deals with dozens of Lenders.  You’ll be glad you did.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Mortgage penalty calculations.. More important than the interest rate.

greedy banker

WHY ISN’T ANYONE TALKING ABOUT THIS?

You bought a home…  you need a mortgage.. what’s the first question you ask your Banker?  “what’s your best interest rate?”.  And the second question is usually, “what product should I choose?”.

Almost no one asks about Mortgage Penalties or how they are calculated.  After all, how often does anyone have to pay a penalty, right?   WRONG!   $10,000, $20,000, $30,000 and higher.  This is how much penalties can add up to… these are real numbers.   And guess what?  This isn’t some unknown bank or small lender.. These are coming from the BIG SIX BANKS.!!

Here’s a little known stat…. “Canadians change their mortgage every 3 years, on average”.  Ask anyone that’s owned a home before.  Chances are, they’ve had to deal with a mortgage penalty at some point..  and for most of them, it’s an embarrassing subject.   After all, who wants to admit to being the victim?  Check out the stats… Read the rest of this entry »

Variable rate is out, Fixed rates are in…. But, which term…?

Variable rate mortgageFor more than a decade, I’ve been recommending Variable rate mortgages, as the product of choice. My clients have saved $thousands.  It’s been a great 11 year run..   But now, the strategy has changed slightly.   Read on, to see my newest recommendations..

QUICK VARIABLE RATE HISTORY.

First, you need to understand the history..  Variable rate had lots of pluses.   It had a lower rate of interest, the penalty can never go over 3 months interest, and you have the option to lock into a Fixed rate at any time.

Being in a Variable meant paying lower rates.  In fact, the difference, compared with Fixed rates, ranged between 1.00% and 3.00%.  This translated to several $$thousand in less interest each year. Read the rest of this entry »

BIG SIX BANKS aren’t passing along the Bank of Canada rate cut to consumers?

banksters monopolyToday, the actual BANK PRIME rate should be 2.50%, not 2.70%.   What am I talking about?… follow me on this and let’s see if this makes sense.

It’s been a few weeks since the Bank of Canada cut the rate.  I’ve been waiting to see how this would play out… First, let’s get the terminology clear.    Bank of Canada overnight rate, or Key rate as it’s referred to, directly affects the Retail Bank Prime rate and Variable rate mortgages.   This does not have a direct impact on fixed rate mortgages.

Last January, the Bank of Canada Governor, Stephen Poloz, surprised most economists and financial experts when he cut the rate by 0.25% (well, not all experts, I called for a rate cut just a week earlier).
Read the rest of this entry »

RBC announces ’employee pricing for mortgages’.. and it’s April Fools day.

RBC-BankRBC is coming out with their employee pricing program for mortgages… yet again.   And like last year’s promotion, it deserves a closer look.. or at least some exposure.

Last year, the program promised to “break through the clutter of price wars within the mortgage marketplace”, to quote Sean Amato-Gauci, Senior VP at RBC.    It was a twist on the auto industry.

And like last year, they aren’t putting their actual interest rate isn’t going to be advertised in any print.  They are hoping Consumers will be intrigued enough to call or walk into a branch to get the actual rate.   Well, I’ll save you the suspense.  Rumors say it could be as low as 2.69% for a 5 yr fixed rate product.  Hey, that’s a good rate.  It’s a competitive rate.  But it’s not the best mortgage out there!   Check out these facts… Read the rest of this entry »

Will Variable rates increase as Bank Prime drops?

where to invest  Here’s a warning to all….   Watch out for the BANKS to increase their Variable rate mortgage pricing.  History tells us that when the Bank of Canada lowers their Target Rate, and the Bank Prime falls, Variable rate mortgage pricing increases.

If you have a mortgage coming due in the next 4 months, speak with a mortgage broker to get you a rate hold immediately!

Today, you can get Prime less 0.65% on a Variable rate mortgage.  That’s 2.85% – 0.60% = 2.20%. THIS PRICE COULD DISAPPEAR!  2.20% is a great rate!   No one would argue that.  The BANKS are counting on you to be content with that 2.20% rate. On March 4th, the Bank of Canada meets again to set the Target Rate.  And all indications point to another 0.25% reduction.   Read the rest of this entry »

BIG SIX BANKS finally cut Prime rate.. Well, sort of…!

banksters monopolyLast week, the Bank of Canada (BoC) cut their overnight rate by 0.25%.  The move surprised all the so-called ‘Financial Experts’…  (well, not me… As I had suggested rates were likely to drop in the previous week’s article and also in the previous month).

Our BIG SIX BANKS had their own surprise for us.   Instead of passing along the usual rate cut to consumers, they sat on their hands and did nothing.   In fact, TD Bank felt good about it and made public statements about how their Bank Prime rate wasn’t fully influenced by the BOC rate.     (That’s such a load of bull, you can almost smell it coming out of your screens!)

And also last week, the Banks immediately cut the rate they pay you on your savings by that same 0.25%.   Read the rest of this entry »

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