Mortgages sometimes have costly or irritating restrictions that you won’t know about unless you read the fine print or ask a mortgage professional.
And the list could go on…
Keep a lookout for restrictions like this when comparing different mortgages.
It’s even more important when sizing up cut-rate mortgages because the lower the rate, the greater the likelihood that a mortgage will be somehow restricted.
i think its time for government regulation on the IRD charges.I dont even think the bank employees know how to calculate it.
I second Jason’s claim. When I wanted to refinance, I got three wildly different IRD values from the same lender during a 3-week period. The smallest was 6k, the largest was 20k. And yes, I checked that the lender’s rates didn’t move in that period.
Thanks for this. That was nice of you to share all this broker intellectual property. I will use it as a checklist when I get my mortgage.
If you need assistance Ray i would be glad to help. doug, firstname.lastname@example.org
From my understanding most of those items have to do with ending the mortgage before the term is up or changing to a different mortgage/house before it is up. So, is it safe to say that you 100% know that you will not break your mortgage before the end date then most of these are irrelevant (save the prepayment ones which most people should be asking about)?
GrankKnost, you would be correct with your statement however saying that you are 100% sure you will not need to break your mortgage is like saying you are 100% sure you will not need medicine from a Dr. over the next 5 years (or whatever term you choose)
There are many restrictions of this sort when refinancing. Meant to prevent us from finding more affordable financing to keep us on the never never plan rather than mortgage free.
In most situations the IRD fee can be recovered in the first year of savings when refinancing and consolidating debt (Credit Card/LOC/Car payment) into a more affordable rate/monthy/or biweekly payments. Intererest charged Semi annually.
This is also a good oprtunity to have your motgage agent agent find you a lender without many of the restrictions listed above. Work with a mortgage agent/Brokerage who has the ability to source 75-80 lenders products that suit you best. Rather than working with an agent that needs to position you with strictly with their institutions products.
12 out of 22 of these restrictions apply to people who are not leaving their lender. At least that is my count.
By the way this is a great list CMT. I have already sent this article to my referral sources.
Banker, I don’t agree. While I agree that it will be very difficult for most people to say that they will NOT break their mortgage over a term BUT it not difficult for me. I know my situation and you dont so please think a bit more before you speak. My question was direct and specific and not general. Besides, I think your example is far fetched. Being sick is not something you choose. Breaking a mortgage or selling your house is something always within your control unless you were to not pay your mortgage. If you are not able to pay your mortgage then I think the penalties to break it are a secondary issue at that point
Grank, if you are 100% certain of your situation, then you don’t need advice from anyone so I am confused why you would be asking for open responses on a public forum?
For the rest of us who are never 100% certain of anything, what I got from this article was a very well defined list of differences in home mortgages. Home buyers often don’t realise this and buy mortgages like they buy milk, not noticing any difference at first until it turns sour a short time later and much to their financial detriment.
Any good and impartial mortgage broker worth their weight already knows this and serves their clients well. Any homeowner currently shopping for a mortgage and wishing to do their own due diligence should find this short list invaluable. Nicely done, Rob.
Marriage breakdown, job loss, job transfer, inheritances, lottery winnings, new girlfriend, horrible neighbors, find the house of your dreams, sickness, injury, dramatic rate changes, investment opportunity. Just a short list of why someone might move of sell their property sooner. For the small savings some of these mortgages give the potential downsides can be harsh if life gives you a twist. Another concern is what they will do at renewal and or will they even be around at renewal.
Thank you banker in and ivory tower and well as Mike saving me from having to reply to Grank.
Hi Banker, Thanks for the gracious feedback. I loved your (quite appropriate) sour milk analogy.
First time, long time..
Thank you for all the work you do. I am an experienced broker and refer to your site all the time. Your work elevates the level of knowledge and professionalism for the whole industry.
Hi Andrew, That was very kind to say. Thank you! The journey’s been a lot of fun and just as educational for us! Cheers…Rob
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