Mortgage Penalty Debate

When selecting a mortgage, almost everyone thinks they will most likely stay at least 5 years in the mortgage and thus a 5 year term is ok.

STATISTICS HOWEVER SHOWS THIS IS NOT THE CASE!  THE AVERAGE PERSON WILL EITHER REFINANCE /  MOVE / RENEW /PAY DOWN or PAY OFF THEIR MORTGAGE IN 3.5 YEARS !!!

So this brings us to the great penalty debate amongst mortgages. Not all Companies are equal when calculating IRD(interest rate differential) . IT PAYS TO KNOW THE PRE-PAYMENT POLICIES OF YOUR MORTGAGE!!!

Let’s Look deeper into the numbers !

IF you took out a 5 year fixed mortgage in August of 2010. You probably received somewhere around 3.94% (1.45% discount off of posted rate). The payment would have been on a 25 year amortization $1306.93 /mo. Today that current balance would be somewhere around $226,729.12.

• BMO – the penalty to break this mortgage would be approx. $6801.87.
• CIBC- The penalty on this mortgage would be approx. $6895.27 with CIBC.
• TD- on TD website , if you pull a payout calculation the penalty would be approx. $6083.90.
• SCOTIABANK- The same mortgage with Scotiabank would be approx.  $6348.
• OUR OTHER LENDERS-the Same mortgage with some of our other lenders, alternative to the major banks, would have a penalty of approx $2871.90

Everyone is always caught up interest rates, its time to get caught up on the FINE PRINT!

THE DIFFERENCE  – between a 3.04% vs 2.99% on a $250,000 mortgage is approx. $11.36 a month. At 3.9 years the final difference is approx. $525.24

Question – if the difference in penalty is approx. $3477.00, is the $525.24 worth it ?

These fee’s are hurting a lot of people and why? Because we are comfortable with the new fancy branch at the corner of the street…or because the interest rate is 0.05% less. Although RATE is very important, When securing your mortgage…dig deeper…look behind the curtain…consult a professional who HAS YOUR BEST INTERESTES AT HEART!

Call us 1.888.955.9011 or email at info@kmortgage.ca | www.kupinamortgage.com