THIS is why I don't use Big banks for Mortgages!

[MortgageQueen]

Hi all,

I currently have a client who "unexpectedly" is breaking his mortgage (as up to 65% Canadians do)

I had him check to see what his penalty would cost. He has a 10 year mortgage, but keep in mind that the fee after 5 year term is minimal. . . so basically he has 1 1/2 years left on his mortgage.

The next time you consider a mortgage with a Big bank, think about this penalty below!! I have directly copied and pasted from the email he sent me. Obviously there is no personal info. attached. His Bank is CIBC.


Mortgage Prepayment Charge Calculator

Your Prepayment Summary:
Based on the information you provided, your prepayment charge will be approximately $33,137.79, if you were to pay off your mortgage on March xx, 2016.
Prepayment charge: $33,137.79
Calculation type: Interest rate differential

Remaining term: 7 year(s), 6 month(s)
Comparison rate: 7 year, 5.850%
Current balance: $391,947.12
Current Interest Rate: 3.890%
Rate discount received: 2.860%
Mortgage type: Fixed
Maturity date: 2023/10/01

Prepayment charge: $33,137.79



If you'd like to compare. . . one of my favourite lenders penalty would have been under the same circumstances. . . .
$4,077 Another lender I use would have been $4,132

Still have that "feel good" feeling dealing with your local bank?. . ..

[Purdee]

do you recommend using a mortgage broker when renewing one's mortgage? TIA

[emg]

That is just crazy!!!

[LIVE SIMPLE]

thank you for opening my eyes...I do not have a mortgage yet... but if I do, NO WAY they get my money...

[MortgageQueen]

do you recommend using a mortgage broker when renewing one's mortgage? TIA

Absolutely. It's not an obligation to use the broker, but chances are they can get you a better deal. Even if you had to have an appraisal done (which most refi's do) it's generally worth the small charge. Like any industry, there's good ones and bad ones. Ask around to friends and workmates for one they've used. If you can't get a reference let me know and I'll help you.
Alberta can be a bit trickier depending where you live. If you think you're employment is even slightly threatened, avoid the banks with these high penalties. You could see all your equity disappear in smoke.

[super807]

I realized the mistake we made renewing with CIBC after renewal. It was when I saw how they expressed our rate on statements, showing the discount, but using the original rate.

We were originally with First Line, which was gobbled up by CIBC, and then opted to renew with CIBC when we negotiated with them to get the rate we wanted. We did it instead of starting over again with a mortgage broker, which we were fully prepared to do if CIBC didn't give us the rate we wanted. Lesson learned. I won't make that mistake again.

We have 2 years left on our current term, and have just under 100K left on the mortgage, so penalty would not be that bad, but I keep hoping we won't have any reason to break it before the term is over. We don't plan to, but most people who break theirs weren't planning to either.

[super807]

do you recommend using a mortgage broker when renewing one's mortgage? TIA

We used a mortgage broker when we first pruchsed, and did not when renewing three years ago, which I regret. Will use a broker when we renew in 2 years.

[MortgageQueen]

Just got another client from Scotia. They received a cash back in 2013. Please remember folks. If you break the mortgage you have to pay it back.
In their case, they have to pay that AND pay aprox. $3,000 more than one of my lenders would charge. I call it the Big Bank Premium.
All this for a mortgage under $200k. You can imagine the bite that's taking out of their equity.

[lilo0003]

I guess we were lucky. We picked a big bank (TD) , stayed with them for the whole mortgage (16 years). We always had a competative rate and even renegotiated when the rates started to drop. Personally the pain of moving my mortgage out weighed the benefit as far as I was concerned & since we never moved there was no need.