Main controversial issue for major Canadian banks
Canadian banks are becoming increasingly concerned by discussions surrounding their fixed-rate mortgage penalties.
Competitors continuously exploit stories of exorbitant big 6 bank penalties to undermine big bank credibility and the media eagerly amplifies these narratives.
Of particular note is the Ombudsman for Banking Services and Investments’ 2018 Annual Report, which revealed that mortgage prepayment penalties remained a prevalent consumer grievance.
This report underscores the significance of considering fair penalty lenders when making mortgage financing decisions versus big penalty big 6 banks particularly since most borrowers opt for a 5-year fixed mortgage and end up breaking it prematurely. 65% to be exact.
Anticipate a surge in such discussions as mortgage penalties reach unprecedented levels.
This is one of a few reasons to consult with a professional mortgage broker before signing for a mortgage. Learn more HERE.
Canadians terminate or change their mortgages frequently
Terminating a mortgage earlier than expected is more common than people realize. Life circumstances can change unexpectedly, such as the need to upgrade one’s home, refinance for debt consolidation, take advantage of lower interest rates, or face separation or relocation.
Any of these situations could necessitate breaking a mortgage agreement and lenders will ding you any chance they get.
It is crucial to understand that the same borrower, with the same term, could end up paying nearly three times or worse as much to exit their mortgage with a Big 6 bank versus other fair penalty lenders.
I say “fair penalty lenders” but it seems unfair to charge penalties at all seeing as the practice is almost unheard of south of the border! Unfortunately Canada has these penalties and we need to plan to avoid them.
I’ve said this to clients in the past, “Lenders are all going to screw you with mortgage fees, administration charges and especially penalties. My job is to ensure you get screwed the least.” How very eloquent.
The number of frustrated individuals suffering financial harm due to mortgage termination will continue it’s skyrocketing trend as long as people stand for the mortgage penalties overall and continue to blindly borrow from big Canadian banks vs fair penalty lenders.
Avoid becoming one of these frustrated individuals. Ask Huber Mortgage for advice! Call 250-212-7954 or email at firstname.lastname@example.org
Conclusions and Further Thoughts
It’s really important for Canadians to know about this penalty scam. This is a huge profit line item for Canadian banks. Over the amortization period of the typical mortgage, banks will charge you nearly nearly as much in interest as the principal original purchase price of the home. Then to add insult to injury and damage people’s financial situation, criminal penalties are charged to clients just to pay back the amount borrowed in the first place.
This seemingly unjust fact of life in Canada has a lot to do with politics. The banks have an impressive lobby and tend to tell the government what to do rather than the other way around
Until we Canadians get out our pitchforks and demand change, its up to you to connect with a professional mortgage broker to strategize how to avoid paying mortgage penalties or at least “how to get screwed the least by your mortgage lender”. Let Huber Mortgage help you!
PS – One of my hobbies is blogging about mortgages, debt and government policy. During the day I’m a MORTGAGE BROKER in Kelowna, BC!
Check out the Huber Mortgage Home Buyers Guide HERE