With Realtors and Mortgage Brokers being at the front end of transactions it is very important the client is aware of the potential penalties when dealing with a Retail Bank, as the penalties can be devastating if clients are looking at moving or refinancing during the term of the Mortgage. Unfortunately, Clients are not being educated upfront on how penalties can affect their future borrowing and limit their choice to shop around.
I was approached by a client who was turned down by a local Bank on a purchase of another home in Waterloo. We had it approved elsewhere, however, the penalty was over $10,000 and the client’s current rate was in the low to mid 3’s. They used an IRD formula that calculates to a very low rate, which accounted for a very large penalty! With such a severe penalty, the client could not move! Doesn’t sound fair, but it is happening!
With such large penalties the client is forced to deal with the same lender and often is not getting the best deal as the Bank knows the client cannot move! This is The Bank Retail World with Posted rates well above the Market. The Broker World mostly deals with Wholesale Rates, where Posted rates are closer to the Market Rates and penalties are not so severe. You can visit our site under Calculators and Resources and compare Penalties.
Realtors or Clients can take advantage of a Free Mortgage Check Up that could save you thousands of dollars or at the very least have a Mortgage Professional help you become Mortgage Free Sooner.
If you are thinking of selling your home, a Mortgage Check Up could give you some options that could save you money with your current lender.