I received an email from someone who found my website on the
internet, asking me why they were charged a discharge fee, by their bank, when
they paid off the full balance of their mortgage. This was a fee that they were surprised to
see and they were checking with me to see if that was a valid charge that they
had to pay.
I explained to this person that this was most definitely a
valid fee and that they should go back to their original mortgage
contract/mortgage commitment to read the fine print, listed somewhere in their
document. If you refer to the fine-print
of your mortgage agreement/commitment, you will see it there listed under a
“fees” section and it will list all standard fees borrowers will pay in certain
situations, for example, service fees, assignment/transfer fee, processing fee,
default charges/missed payment fee, as well as the discharge fee, as well as
other possible fees related to the mortgage.
Here are a few situations where you would be required to pay
a discharge fee:
1) if you pay off
your entire mortgage balance;
2) if you switch from
your current bank, to another bank, and register a new mortgage with the new
bank.
3) if you sell your
home and switch from your current bank to another bank.
The discharge fee is worked out, by your bank, on a simple
one page form and it really does seem to be a very excessive fee to pay, for a simple
form that may have taken your bank a short time to prepare. Interestingly, the mortgage discharge fee
varies from province to province and from lender to lender. Did you know, for example, that in the province of British Columbia, The Financial
Institutions Commission (FICOM) which regulates the financial services
industry, has stated that a mortgage discharge fee must not exceed $75. You can read about their position at this following
link:
http://www.fic.gov.bc.ca/pdf/mortgagebrokers/mb-07-003.pdf
Unfortunately, the Financial Services Commission of Ontario
(FSCO) has not created a similar cap on the
bank’s mortgage discharge fee in Ontario. While every bank must disclose the discharge
fee, in the mortgage contract provided to you, you can also go on-line to see
what current published discharge fees are, at any time. Remember, however, that the discharge fee
that you see in the mortgage contract you signed, is the fee that you will be
charged once there is a need to have a mortgage discharge statement
prepared. Bank’s published discharge
fees can be viewed at this following link:
http://www.fiscalagents.com/thestar/mtg_disx_sort.shtml
This article was written by Elizabeth Blair, a Licensed Mortgage Agent with
Mortgage Edge in Richmond Hill,Ontario. Elizabeth
services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905)510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: www.missmortgage.ca
Elizabeth is
licensed with the Financial Services Commission of Ontario and is also a Member
of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca
Lic # M08005880
Brokerage Lic # 10680
Head office is located at:
15 Wertheim Court, Suite 210,Richmond
Hill, Ontario, Canada.
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