Fees for Porting a Mortgage

[maggiespice]

I don't know where to start with this. I guess to put it simply I was charged a fee for going DOWN in my Mortgage when I Ported. I am so not impressed with this. I asked if they would waive the fee, as I have been a customer for so many years...

Well, not anymore. I am buying my time. I have a year or two to go with my current bank and I am looking so forward to the phone call I get from them each time my Mortgage is due. I am going to tell them to pay me every cent back they took when I Ported. (I know they will not do that). It's too bad, they have been good to me all these years with really good interest rates and such, but now it is time to kick them to the curb!!!!!!

[MortgageQueen]

Hi MaggieSpice,
I know that must be very frustrating for you especially when you were likely so pleased to be saving money by decreasing your mortgage. As an explanation. . . the charge is similar to when you prepay your mortgage. SO when you decreased your mortgage, the bank lost a certain amount of money that they "would have" made on the difference between the 2 amounts. That's where the charge comes in.

The question is: was it a fair and reasonable amount or did they gouge you?

[maggiespice]

Thanks for that MortgageQueen. Well, it was a significant decrease for the new Mortgage. It kinda was confusing, as we were told by some that the bank a lot of the time will waive the fee if you are a good customer, etc, etc. What I don't understand is we are excellent customers, no issues at all with the bank, so why would they not waive it? Because we are up for renewal soon would they not consider that? Would it not make sense to keep the client happy so we stay with them longterm?

[maggiespice]

Oh, BTW, we feel like they gouged us.....

[mortgagemat]

When porting a mortgage, the lender will try to charge you a penalty proportional to what you are decreasing the mortgage by.
For example, you decrease the mortgage by 50%, they will charge you 50% of the penalty.
Some lenders will charge you the full thing if they think they can get away with it.
Some lenders will discount.
The problem is that you are really at your lenders discretion, and each lender will follow different policies. According to the paperwork, they have the ability to charge the whole penalty if you are decreasing the amount (this is why a variable rate is a beautiful thing).

Now, there is a way to get a reduction on the penalty using different techniques involving, discharging on your payment dates, making prepayments, blending and extending, and other ways to limit of eliminate the penalty. I wrote a big post about it prior, but it got deleted...

Thanks,
Mat Gibeault
1-888-613-3435
Mortgage Agent

[MortgageQueen]

[brunt]

Things like this are always about power. Not a power trip, but the relative power yielded by the two parties in the transaction.

When you reduced your mortgage, the bank was fully within its rights to charge you a fee. Your mortgage wasn't an open one - you normally have to pay a higher interest rate for this privilege. I'm not saying that it was right, just that they had nothing to gain by waiving the fee, you would have been the only party to gain. They had all the power because you had no alternative but to pay the fee, since closing your mortgage there would also have resulted in a fee.

Now, when your term is up, things are entirely different. What I would do is when it is about 90 days before your term is up, get your "Plan B" in order. Find the best possible deal for your mortgage at another bank.

When you talk to your current bank about renewing the mortgage, tell them that you feel that the fee you paid was excessive, and that in order to keep your mortgage there, you feel that having some or all of that fee refunded would be fair.

Here you have significantly more power. If you walk, the bank gets no further interest from you. You have the option to pay your interest to another bank. Take advantage of the small window of opportunity while you have it. But you must be willing to move your mortgage to another bank if they say "no".

When I last had a mortgage (it was about 20 years ago), it was standard procedure to pay about $250 to the bank to renew a mortgage. I never paid this fee, because at this point, I recognized that I had the power, and I told them that I could pay that fee, and the associated interest, to any bank, why should I pay it to them? 100% of the time, the bank waived the fee - they had everything to lose.

[tjthemanto]

I don't know where to start with this. I guess to put it simply I was charged a fee for going DOWN in my Mortgage when I Ported. I am so not impressed with this. I asked if they would waive the fee, as I have been a customer for so many years...

Well, not anymore. I am buying my time. I have a year or two to go with my current bank and I am looking so forward to the phone call I get from them each time my Mortgage is due. I am going to tell them to pay me every cent back they took when I Ported. (I know they will not do that). It's too bad, they have been good to me all these years with really good interest rates and such, but now it is time to kick them to the curb!!!!!!

These guys even charge you a Mortgage Discharge Fee , when you pay off your Mortgage . I am not talking about pre-payment or anything like that , but you finish your normal MTG & payments and at the end of it , they charge you for it.

My parents paid of their Mortgage & at the end of it they had a $ 300 MTG discharge fee waiting for them ..LOL..basically a letter saying that you NO longer have a MTG & you don't owe us anything anymore

Its like I owe you $ 5,000 & pay you back & now you charge me $ 300 extra for paying you back in addition to ALL the ineterst you charged me on the $ 5,000

[tjthemanto]

What if the ported mortgage was UP instead of DOWN ..would this bank now give you additional incentives or discount or money for doing so ??..I don't think so ..but they are quick to do it the other way round

Sadly its all in the contract, so not much you can do legally about it

[MortgageQueen]

What if the ported mortgage was UP instead of DOWN ..would this bank now give you additional incentives or discount or money for doing so ??..I don't think so ..but they are quick to do it the other way round

Sadly its all in the contract, so not much you can do legally about it

Generally speaking, lenders will only blend the existing rate with the new rate. Possibly a shorter term might be in order if this is not a desirable outcome for you.

[maggiespice]

Thank you everyone for your imput. I appreciate being able to talk about this as I get some really good info from SC!