Restrictions contained in the the fine print of your mortgage could cost you thousands of dollars. Often these restrictions are contained in the fine print and often homeowners are not even aware of these restrictions until they find the need to break their mortgage. This is why it is so important to talk to the Price Team to make sure you are protected when it comes to the biggest investment of your lifetime. If you have obtained your mortgage directly from the bank, most if not all examples below have not been mentioned or explained to you. Since we look out for your best interests, we not only do our best to steer you away from lenders and mortgage products that are potentially onerous, but we explain any important ones to you.
Here are some examples…
Can’t break your mortgage before your term is up or in the 1st three years.
A penalty surcharge of 1% for mortgages broken in the first 12 to 36 months.
Re-investment fees on top of mortgage penalties.
Interest rate differential(IRD penalties based on an onerous bond yield calculation.
IRD penalties on variable rate mortgages(usually only apply on fixed)
IRD penalties based on the costly posted vs discounted rate fomula.
Inability to port unless purchase and sale take place on the exact same day(difficult to do)
No guaranteed rate discount if you switch from variable to fixed rate.
No refinances in the 1st year.
No fee switches for transfer eligible mortgages.
Amortization limits of 25yrs
minimum amortizations of 15 to 18 years.
Restrictions on converting from fixed to variable in 1st six months.
No ability to break open your equity line of credit without a penalty.
No prepayments within 30 days of discharge
Inability to port across provincial lines
High administration fees for, porting 100% clawback of cashback if mortgage is broken before maturity
Requirement of full banking relationship with the lender.
No lump sum pre-payment privileges
No annual payment increase
Pre-payments restricted to one day in the year
We think it’s time for the government to step in with regulations on IRD charges and full disclosure is needed for homeowners to understand. While no one intends to break a mortgage during the term, dramatic rate changes, divorce, sale of house, job transfers, finding a better home, sickness, injury, job loss, investment opportunity, and even bad neighbours can cause someone to decide to break their current mortgage. When you do, we’re here to help you get the best rate and mortgage terms possible.
Wouldn’t you rather have an expert mortgage broker be vigilantm on your behalf, than be in the dark, only to get a rude shock in future when you break your mortgage, because you arranged it yourself?