For those of you who read our articles regularly, you understand that we are Mortgage Consumer Advocates. If you are reading us for the first time, please allow us to explain that someone must be on the consumer’s side, looking out for your best interests. Someone must protect you, right?
We decided to take on this role about ten years ago, and this role is more important than ever. Yes we are biased, biased in your favour largely as a result of bank practices that not only can have a negative effect on you, but also since the big banks more than ever, are introducing clauses IN THE FINE PRINT that they do not disclose to you.
So when you go to a bank for your mortgage without any knowledge or expertise in what you are getting into and signing, well let’s put it this way, it can cost you, not just money but great heartache.
We speak often about the new collateral mortgage product all the banks are using. In our view, it is a mortgage product that is best avoided. We have written about the ‘fine print’ clauses that can be absolute killers, clauses that you are never told about like punitive bank penalties, fees and practices.
A more recent example is TD’s altering of a clause in their variable mortgage contracts that ‘triggers’ you to make a lump sum payment if your mortgage balance exceeds 80 per cent of fair market value. Previously any ‘trigger’ was set at 75 per cent, and it was at the ‘suggestion’ of the bank that the borrower pay a lump sum to bring the loan back in line, or have the property appraised at the client’s expense. Another option was to convert the mortgage to a fixed rate with equal payments.
The new clause now ‘requires’ the borrower at bank notice to obtain and pay for an appraisal within 30 days of notice to determine if a trigger point has been reached. If it has then you ‘must’ (it is no longer an ‘option’) make a lump sum payment, convert to a fixed rate mortgage or increase your payments to an amount sufficient to amortize the outstanding principal amount. Now here’s the really bad part. If you do not do what is ‘required’ the bank can demand payment in full of the total outstanding principal plus costs. In other words THEY CAN GO ‘POWER OF SALE’ even if you have missed no payments.
This is but one of many many examples that people are unaware of that can be potentially devastating to you in future. As professional mortgage brokers we help you avoid institutional policies like this that are not in your best interests by recommending mortgage lenders who have much more favourable ‘terms’. This is why the ‘Terms’ are every bit as important as the ‘Rate’.