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Tagmortgage penalty calculation

When Second Mortgages Make Sense

When a Second Mortgage makes good financial sense.

When Second Mortgages Make Sense

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, perhaps it’s just someone who doesn’t want to pay outrageous costs and penalties to refinance their existing mortgage.

The mere mention of second mortgages conjures up all sorts of images. Most of them, negative. For many, a second 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, second mortgages carry a higher interest rate than first 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 “When a Second Mortgage makes good financial sense.”

TD & RBC raised the POSTED rate… but not their REAL rates

Rate Image, May 2018

Much has been written about last week’s Posted rate hikes by TD and RBC. Don’t panic! This is just their posted rate – it’s not the actual rate they give to clients.

I do, however, think we’ll see a minimal rate hike in the coming weeks due to five-year Government of Canada bond yields increasing slightly. Fixed rates are priced closely to bond yields.

Continue reading “TD & RBC raised the POSTED rate… but not their REAL rates”

Considering a Second Mortgage? It can save you money!

Home Finances

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, perhaps it’s just someone who doesn’t want to pay outrageous costs and penalties to refinance their existing mortgage.

The mere mention of second mortgages conjures up all sort of images. Most of them, negative. For many, a second 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, second mortgages carry a higher interest rate than first 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 “Considering a Second Mortgage? It can save you money!”

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… Continue reading “Mortgage penalty calculations.. More important than the interest rate.”

Historical low mortgage rates mean RECORD HIGH penalties for BIG SIX BANK clients!

greedy bankerMortgage penalty calculations continue to mystify Canadian consumers.  For years, I’ve posted numerous articles on penalties…  how they affect us… how they are calculated…..why you need to understand them.. and most importantly, HOW TO AVOID THEM!!

Today, I’ll give you explicit details on the great mortgage penalty mystery…

I’ve shared dozens of horror stories about average Canadians being hit with mortgage penalties of $12,000, $15,000, $20,000, $30,000 and more.   These examples aren’t from some obscure small financial institution. It’s your BIG SIX BANK.   Yet, the attitude from Consumers is that it won’t or doesn’t affect them….until it’s too late.

I’ve also shared the solution on how to avoid this… and I’m going to share that with you once again..  If you want to know how to avoid monster penalties, then take a few minutes and read this.. It could save you untold $$thousands…. Continue reading “Historical low mortgage rates mean RECORD HIGH penalties for BIG SIX BANK clients!”

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

Olive and harper 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.”

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

 

loan sharkQuick, 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.”

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

More BIG SIX BANK penalty nightmares… when will Canadians learn to look elsewhere for their mortgage?

greedy banker Here’s a great article from The Star’s Ellen Roseman on mortgage penalty nightmares.  She shares just a few stories out of the dozens she’s received over the past little while.   There is no reasonable justification for charging borrowers these inflated penalties…   If you think your immune from these penalties, think again.

Notice the name of the Banks that are mentioned in her article… Yes, part of the BIG SIX club…  Don’t get lulled into believing that dealing with a BIG SIX BANK offers some sort of immunity from higher penalty charges…   The experiences of these borrowers and countless others proves otherwise…

I’ve been getting more calls and comments on this recently… $10,000, $15,000, $20,000 in penalties.  How is it that the smaller Lenders can offer the same or better interest rates, and not charge these inflated penalties?   The BIG SIX BANKS reported a record $30billion combined profit in 2012…!!  Doesn’t make any sense, does it?   And yet, it continues…

Remember, there are several other Lenders that don’t calculate their penalties with the same inflated formula…   Seek advice from a mortgage broker…  get another opinion… There are better options and I have access to them!   It’s no secret…. I’m happy to share this info to anyone that wants it.

Come on Federal govt… do something to stop this madness and protect Canadians from this gouging!

Your best interest is my only interest!

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

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Mortgage Penalties exposed… an in-depth study, part 2…the update.

greedy banker Two years ago I published, what would become, my most widely read article.   Mortgage Penalties exposed…. an in-depth study reveals unjust penalties was written to show just how unfair penalties had become.   The surprising results showed that the BIG SIX BANKS were the leaders when it came to charging the highest penalties in Canada.   If you had a Fixed rate mortgage and thought your mortgage penalty could only be a 3 month interest charge, you were in for a huge shock.

Consumers were experiencing $10k, $15k, $20k and even $30k in prepayment penalties and more! Ridiculous amounts.   Put another way, these penalties equaled 12, 16, 20 months worth of interest and sometimes more!   But we also discovered some good news..   There are better alternatives to the BIG SIX BANKS.!  There are several other Lenders that don’t use the same inflated and unfair prepayment penalty calculation as the BIG SIX BANKS.   There are other Lenders with competitive, and often better, interest rates, and with much lower penalties.  That original study opened the eyes of Canadian borrowers. (another eye-opening stat…the BIG SIX BANKS reported a record $30billion in combined profits for 2012.)

Two years later, with more consumers being forced into Fixed Rate products, we thought it was time to revisit Mortgage Penalties and see what changes had been made, if any…

Continue reading “Mortgage Penalties exposed… an in-depth study, part 2…the update.”

The Star reports BMO suggests it’s time to lock into fixed rates…. well, maybe..

I had a discussion with The Toronto Star’s Susan Pigg about Fixed and Variable rates.  Click here to read my comments in this article.

In short, BMO Captial Markets says it’s time to lock into a Fixed rate…. Well maybe, but I would caution anyone that had a BMO variable rate mortgage to think twice about locking into BMO’s well publicized 2.99% 5 year NO FRILLS mortgage.   This product has limitations and restrictions that make it impossible to get out of the mortgage without selling your home.   There are better options out there…  you can get a great rate without sacrificing your options and privileges.

You also have to factor in the infamous BIG SIX BANK penalty calculation.  We’ve written about this before.  This could cost you dearly should you wish to refinance or have to pay the mortgage out before maturity.   We have seen numerous cases of Bank prepayment penalties adding up to 12, 14, 18 and 20 months worth on interest.  That’s right, 20 months worth of interest.   Don’t get held hostage by your mortgage provider.

If you have a Variable Rate mortgage that is price at Prime less 0.50% or lower, I would stick with it…  If you are higher than this or if you mortgage is coming up for renewal, then you should consider a Fixed Rate mortgage…  And the only reason to consider Fixed rates is because they are priced so close to what a Variable rate could be had for today…  Best Variable is around Prime less 0.25%… that’s 2.75%.  Best 5 yr Fixed  with ALL FRILLS is around 3.19%…

But before you make any decision, please speak with an unbiased advisor, like a mortgage broker…. Find out which product is right for you…  Everyone is different and we all have different needs.  There are so many unadvertised specials these days….  Your Mortgage Broker can access these products and  also help explain the differences in penalty calculations and why this should be looked at more closely, even it you don’t think penalties apply to you…

 

Mortgage penalty rules change… finally.. well, sort of…

The Federal govt announced some changes to protect Canadian Consumers… including rule changes to credit cards and mortgage prepayment information.   Here’s a link to the entire news release.

For our purposes, we are focusing more on the mortgage prepayment announcement.   Here’s a link to that portion of the news release.

There are 5 Elements to the Code of Conduct for Federally regulated institutions.  The changes must be implemented within 6 to 12 months.   In short, the new Code of Conduct rules will require these lenders to provide clear disclosure on how penalties are calculated, along with online calculators and access to knowledgeable staff that can be contacted through a toll-free phone. Continue reading “Mortgage penalty rules change… finally.. well, sort of…”

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