Back to Blog
3 Oct



Posted by: Tracy Luciani Price


Getting a mortgage is much more than about ‘Rate’. We have said this many times in past articles, but it has never been more relevant than today. Beware of the fine print.Mortgages have become very complex documents, especially so in the last couples of years with the introduction (by the banks) of collateral mortgages. Also the fine print regarding the penalty to break a mortgage before maturity has become daunting and varies significantly from lender to lender.

Take Rick a new client who had less than a year left in his term, and who was told by his bank that his penalty was $15,000. To make matters worse his bank would not give him a proper explanation, let alone their calculations as to why the penalty was so high. Turns out the fine print was never explained to him by the bank nor b a lawyer because the bank convinced him (to save money) not using an independent lawyer.In recent years the bank(s) have cleverly crafted the mortgage docs such that they can now recover any discount ‘FOR THE ENTIRE TERM’. Rick’s contract rate was 3.89% and he wascharged  the difference between posted(market rate with no discount) 5.19% and 3.89%.The mortgage penalty has become a huge issue where there needs to be much more consistency, accountability and up front disclosure to protect the consumer. Until this happens consumers are vulnerable when they obtain a mortgage directly from the bank themselves.

And so it goes. The banks do everything they can to get people to take a fixed rate mortgage versus variable rate, and to ‘lock in’ to a fixed, because they know the odds are in favour of a high percentage of borrowers will move or refinance before the end of term and INCUR A PENALTY. You have no protection at what ‘lock in’ rate you will be offered by your bank, whereas with us, we make sure you will be offered the lowest discounted fixed rate since we make sure it is in the fine print.

Over the past several months the banks have been eliminating the discount on variable mortgages(it has dropped from a high of .90% to .20%) thereby removing the incentive to choose variable, in effect ‘forcing’ people to choose fixed.We still have variables at .50% below prime, and prime is expected to remain stable.

Folks, when you come to us for a mortgage, we make sure that we get you a mortgage that best suits your interests, and equally as important, we take the time to explain all the important ‘fine print’ details that you should be aware of.Isn’t it clear who you should get your next mortgage through?