My Penalty is What??!!

By Jim on Aug 15, 2013

Rising interest rates are imminent, so many are rushing to lock down their current low rates (which is a good idea). For some people, that could mean getting out of your existing mortage early, and while avoiding mortgage penalties may not be possible all together, you can do something to limit them.

Common practice has banks comparing your interest rate to their current interest rate for the term closest to the amount of time left on your mortgage. Since there’s no rule about which rate to use, they can use any rate they want. With a 2% different between one- and five-year rates, that’s a lot of wiggle room. - Money Sense Magazine

So what can you do to combat this? Well, if you know the annual prepayment amount for your mortgage (usually between 10% and 20% of mortgage), ask your lender to apply that before they calculate the IRD (Interest Rate Differential). If you're working with a good lender, they'll do this anyways, but unfortunately sometimes you need to ask.

You can also do your research and check out the other options out there, shopping around is recommended for renewals. You can always remind your lender that you'll take your business elsewhere if they are making this a painful process for you.

It's always important to be diligent when it comes to your money! Do your research always, and if you ever have questions about this topic (or other mortgage questions), please feel free to contact me.

Call Jim Henheffer today!

Suite 200, 1212 9th Avenue SE
Calgary, Alberta, T2G 0T1
Phone : 403–837–7542
Fax : 1–888–837–9133
Contact Me | Send an Email Apply Now | Special Rates
  1. Recent Blogs


    28 Jan

    Late last year Finance Minister Bill Morneau announced that there will be new down payment requirements coming into effect on February 16,…


    07 Mar

    Over the past couple of months we have seen some shifts in some of the most popular mortgage products in the market. We have seen a modest increase…


    28 Jan

    Just a couple of months ago the former Alberta Conservative government unveiled their plan for the province which was highlighted by a staggering…

Recent Videos

Getting Pre Approved What can you Afford? View All Videos
1 2
Canada Mortgage Direct Jim Henheffer

VERICO Canada Mortgage Direct Inc. Each Verico Broker is an independent owner operator.