Mortgage Penalty Calculator Below :) - For Breaking Ur Mtg.

[tjthemanto]

See the calculator below to figure out how much IRD penalty you will pay for breaking your fixed rate mortgage with your bank.

https://www.rbcroyalbank.com/cgi-bin...calculator.cgi


Before getting started, please keep the following in mind:

The tool estimates the prepayment charge (the cost to break your mortgage) as of today’s date on closed, fixed rate mortgages only(1). Please contact us to find out your exact prepayment charge.

The prepayment charge will be the greater of 3 months interest penalty or interest for the remainder of the term on the amount prepaid calculated using the interest rate differential .

For illustration purposes, this tool adds the prepayment charge on to the existing mortgage amount(2).

You may need to have your original mortgage documentation on hand to answer some of the questions below.

[tjthemanto]

Also see this article from Toronto Star about breaking your mortgage.

http://www.moneyville.ca/blog/post/1...ey-figure?bn=1

My $3,900 mortgage penalty: How do they figure?

January 19, 2012
By Peggy Mackenzie

The true cost of breaking a mortgage can be hard to find out.


Some good news for home owners. The Bank of Montreal kicked off a mortgage war by offering a 2.99 per cent rate for a 5-year-closed mortgage. The other big banks responded and the Royal Bank has offered me a deal that matches BMO.

To take advantage of the Royal's offer, I must first break my mortgage with PC Financial. With 21 months to go, a penalty will be applied when the mortgage is discharged, which I think is fair. What's not fair is the muddy process for calculating the penalty.

Two conversations with PC Financial customer service gave me a quote for the same $3,900 penalty, but neither could explain how it was calculated. Both quoted the Interest Rate Differential calculation (IRD) for the penalty (as opposed to the old standard of three months' interest).

Independent of the banks, I searched the web to see if an IRD calculation existed to explain the penalty. The Royal Bank provides a site called "Should I Break My Fixed Rate Mortgage?" When I entered my mortgage details into the IRD calculator it was $1,000 less than the penalty quoted to me by PC.

These are the variables I input into the calculator: $116,000 balance, 21-month term, accelerated bi-weekly payment; $600 payment; 5.2 per cent rate, 0.25 per cent discount from the posted rate.

When I met with the RBC mortgage specialist, she was also surprised by PC's high penalty for such a low mortgage. She's investigating to see if the penalty can be lowered when she asks for the mortgage discharge statement. If it can't, the mortgage will stay with PC for the rest of the term.

Customers need to know why a standard penalty can be calculated to yield widely different results. How are these penalties calculated? How are the variables weighted and is any of it written down? Moneyville frequently writes about the lack of standards when it comes to IRD calculations. As Ellen Roseman reported in October, "The federal government promised to standardize mortgage penalties, but didn't follow up. Now there's a class action lawsuit challenging the math used by CIBC Mortgages Inc., a subsidiary of CIBC bank."

The suit must be certified to proceed to trial which could take a year or more. Many customers will be following this legal process if the suit goes forward. In the meantime, I'm contacting my Member of Parliament to demand that calculating the IRD becomes a transparent process.

[tjthemanto]

CIBC is being sued over how they calculate their mortgage penalties.

http://www.moneyville.ca/blog/onyour...rtgage+penalty



CIBC is being sued in a class action suit over mortgage penalty fees.

Tony Bock/ Toronto Star

I don't like the unfair way that prepayment penalties are calculated for borrowers who break a closed mortgage. Lenders don't follow a standard formula, nor do they make full disclosure in their contracts.

In the past few years, I've received a steady flow of mortgage penalty complaints. Many have been resolved in the borrower's favour, including one where ING Direct gave a $7,300 refund to to a borrower because of faulty communications.

The federal government promised to standardize mortgage penalties, but didn't follow up. Now there's a class action lawsuit challenging the math used by CIBC Mortgages Inc., a subsidiary of CIBC bank.

Kieran Bridge, a Vancouver lawyer, is the lead counsel on the case, in partnership with Siskinds LP in Ontario. You can find information at Siskinds' website.

"CIBC believes this suit to be without merit and we intend to defend ourselves vigorously," says bank spokesman Rob McLeod. "CIBC's disclosure of how prepayment charges are calculated is clearly laid out in our mortgage documentation."

The class action, which has not yet been certified to go ahead, claims the language was so vague in CIBC's mortgage contracts that the penalties are unenforceable. It wants the bank to give refunds going back to 2005.

Robert McLister of Canadian Mortgage Trends mentioned that I have a connection to this lawsuit. Lawyer Matt Baer of Siskinds posted a comment at my blog last July, saying he was doing research on mortgage penalties and people who paid them. Maybe he found a few participants that way.

Class actions have been used against mortgage lenders before. A number of Canadian banks were sued successfully for not including a borrower's prepayment privileges when calculating the penalty.

McLister says mortgage penalty language is "notoriously cryptic" at the big banks. I agree, since I get complaints about almost all of them.

Verbal disclosure to customers is often non-existent or wrong. Many borrowers think they'll pay a penalty of three months' interest. Later, they're hit with an interest rate differential penalty that is much higher than they had anticipated.

I hope this lawsuit puts pressure on Finance Minister Jim Flaherty to keep his promise. Action on unfair mortgage penalties is long overdue.

[MortgageQueen]

I was going to post a caution that "every Lender has their own formula" for determining the IRD penalty. . . but the 2 quoted articles pretty much sum it up. the only guaranteed method is call your Lender and ask.

If you ARE considering breaking your mortgage to refinance at lower rate, contact your broker. They can find the best Lender for you to transfer to and they don't charge for their services.
Feel free to PIN me as well, if you have a question.

[tjthemanto]

I was going to post a caution that "every Lender has their own formula" for determining the IRD penalty. . . but the 2 quoted articles pretty much sum it up. the only guaranteed method is call your Lender and ask.

If you ARE considering breaking your mortgage to refinance at lower rate, contact your broker. They can find the best Lender for you to transfer to and they don't charge for their services.
Feel free to PIN me as well, if you have a question.

True..that's probably why CIBC is getting sued. I wouldn't be surprised if the other banks get sued to. I am sure lot of people must have overpaid their mortgage penalties with other banks to..since the IRD calculations are so vague.

The banks just tell you a vague description of how the IRD penalty will be charged when you break your mortgage without really telling you in detail how the penalty was actually calculated or what formulas were used.

[ashedfc]

This is a very big grey area for the bank is mortgage business..... & unfortunately a lot of borrowers are getting hit by a huge penalty..

[tjthemanto]

[Shwa Girl]

Thanks for bumping this thread.

We are renewing in the summer. We have an appointment with a mortgage broker. We already looked at the calculators and figured it is better to pay extra to principal (when we have a bit of money), than break the mortgage to refinance.

Thx much.

[MortgageQueen]

The big banks calculate their IRD differently than a lot of Lenders Brokers use (that said, brokers use big banks too- so get a GOOD broker)
Big banks take the difference between the low rate they initially gave you and calculate your penalty with the much higher public posted rate.
The Lenders I use do NOT do that. They use the "honest" and appropriate method of using the difference between the initally discounted rate and their current discounted rate. . . . which is probably a minimum of 1 or even 2 percentage points less. . .BIG savings.

[bargain_hunter_lola]

CIBC is getting sued? Hmmmm

We were dinged almost $7000 for breaking our mortgage a year and a half early.

Our broker estimated the fine at $2500.

When everything was closed and we got the cheque from our lawyer (what we made on our last house) it was much lower than estimated. I called the broker and she said there wasn't anything she could do.

It's been almost a year now and I'm still mad! Over $4000 is a lot to be off by.

[MortgageMaster]

Bargain hunter: Did you have a clause in it that you could port your mortgage to your next home? FirstLine - it was a unit of CIBC- had a 60 day clause.
The best thing is to do is call the customer service number somewhere in your mortgage contract to ask what the payout fee would be the day that you call. That way you will have a very good idea,
It sounds like the mortgage that you broke was in the 5% range.

[MortgageMaster]

Bargain Hunter - did you have the abilty to port your mortgage to your new home? Mine was with First Line which used to owned by CIBC -mine had a 60 day term.

In future the best thing to do is call your mortgage company customer service and ask for a payout figure for the day that you call. That way you will have a good idea what the payout will be.

It sounds like previous mortgage was in the 5% range.

[bargain_hunter_lola]

Bargain hunter: Did you have a clause in it that you could port your mortgage to your next home? FirstLine - it was a unit of CIBC- had a 60 day clause.
The best thing is to do is call the customer service number somewhere in your mortgage contract to ask what the payout fee would be the day that you call. That way you will have a very good idea,
It sounds like the mortgage that you broke was in the 5% range.

Yes, I believe we did. Our broker told us we had the option to top up our mortgage (this mortgage is higher than our old one) or switch to a bank with a lower rate. She said it would be beneficial to switch, so we did. Now I'm not so sure!

It's all done now but we definitely learned our lesson! Do your own research! Don't just assume your broker is on the ball. It really does surprise me though, our broker has been fantastic in the past. After the fiasco, she started ignoring my calls. I think she knew she screwed up!

Our lawyer asked us to sue! But it would probably cost more in the long run. We decided to just move on.

[tjthemanto]

Yes, I believe we did. Our broker told us we had the option to top up our mortgage (this mortgage is higher than our old one) or switch to a bank with a lower rate. She said it would be beneficial to switch, so we did. Now I'm not so sure!

It's all done now but we definitely learned our lesson! Do your own research! Don't just assume your broker is on the ball. It really does surprise me though, our broker has been fantastic in the past. After the fiasco, she started ignoring my calls. I think she knew she screwed up!

Our lawyer asked us to sue! But it would probably cost more in the long run. We decided to just move on.

Try the following 4 steps to see if it gets resolved and if you think something wrong was done.

Especially the last step ( Independent Consumer Support Agencies )
as once it goes out of CIBC there might be more pressure on them.



https://www.cibc.com/ca/cibc-and-you...omplaints.html

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