TagMortgage penalties

Posted September 10, 2014 Consumer Debt

More disclosure.. but still no standardization of Mortgage Penalties.

Last week, we heard some potentially good news for Canadian consumers. Federal Finance Minister, Joe Oliver, announced Banks would have to provide consumers more disclosure on certain products, including collateral mortgages. We welcome more disclosure.

However, before we get too excited and give the Federal govt too much credit, let’s wait to see if this latest promise really happens. If you are wondering why I’m so skeptical, it’s with good reason. The Federal govt has not honored their commitments before. And I’m talking about the promise made to Canadians to charge a fair prepayment penalty… Remember that one? Continue reading “More disclosure.. but still no standardization of Mortgage Penalties.”

Posted April 8, 20143 Comments Consumer Debt

A 2nd mortgage? Yes, this option can save you money.

Quick, what’s the first thing that comes to mind when you think of “second mortgages”? For some it could be that shady looking character in a smoke-filled pool hall… guys with gold chains and a baseball bat nearby. Maybe you’re thinking of someone in financial trouble. Or maybe it’s just someone who doesn’t want to pay outrageous costs and penalties to refinance their existing mortgage.

The mere mention of 2nd mortgages conjures up all sort of images. Most of them, negative. For many, a 2nd mortgage can be a last resort solution during a financial crisis. For several others, it can be an opportunity to save money. That’s right, to save money.

Sure, 2nd mortgages carry a higher interest rate than 1st mortgages but, they can also serve a purpose. One of those purposes can be to save you money. Yup, I said it again. There are some new trends emerging with today’s new mortgage products that are forcing consumers to seek other options. Two of these trends are INFLATED PREPAYMENT PENALTIES and NO FRILLS MORTGAGES! Continue reading “A 2nd mortgage? Yes, this option can save you money.”

Posted November 11, 20131 Comment Mortgage News

Long term is almost always more expensive.

Ever wanted to change cell phone providers? How about internet providers? Move your investments or rrsps? Cancel that hydro or gas contract because you moved?

And how about mortgages? When interest rates started heading down about 4 years ago, thousand of borrowers in fixed rate mortgages wanted to get out of their higher rates and start benefiting from the record low interest rates.

But borrowers were shocked to hear of unbelievably high early prepayment penalties… Penalties of $15,000, $20,000, $30,000. One recent situation had CIBC charging a $33,000 penalty on a $500,000 mortgage. I’ve seen dozens and dozens of situations like this. Almost all of these high penalties were from one of the BIG SIX BANKS… Continue reading “Long term is almost always more expensive.”

Posted November 9, 2013 Money saving tips

Tips on how to reduce your mortgage penalty

Interest rates are still near record low levels. You’ve heard your co-workers, friends or family brag how lucky they were to renew into these once in a lifetime rates.

But how you do you take advantage? If you break your fixed rate mortgage then you face an enormous prepayment penalty…we’ve seen reports of $10k, $15k, $20k and even $30k in penalties….Wow!

Well, here’s a few tips…

-first, if you are in a 10 year fixed rate mortgage, and your are at least 5 years into the term, then the maximum penalty is 3 months interest (this is a little known fact… Section 10 of the Interest Act of Canada).

-One more way to reduce the penalty is to utilize the annual prepayment privilege that’s within the mortgage. Most mortgages have between 15% and 25% prepayment privileges which equates to a 15% to 25% reduction in the penalty…. Continue reading “Tips on how to reduce your mortgage penalty”

Posted July 4, 20132 Comments Interest rates

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

In 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.) Continue reading “Banks maximizing mortgage penalties again… but there’s a bright side..”