Miss Mortgage

Having a hard time getting my bank to properly disclose the mortgage penalty

In the last few months, I have discussed mortgage penalties with various individuals.  With the recent plunge in interest rates, many fixed rate mortgage holders, have contacted their banks to find out what it would cost to break their mortgage term in pursuit of today’s much lower mortgage rates.

In some instances, it does make sense to break an existing mortgage rate, to move into a lower rate, but the challenge will most certainly come when you try to talk to your current lender about your mortgage penalty.  Some of the individuals who approached their bank to find out about their penalty have told me about receiving conflicting information about the mortgage penalty amount as well as how the mortgage penalty was derived, from their own banks.  There have been at least 100 comments and stories submitted in response to Ellen Roseman's columns in the Toronto Star about mortgage penalties and many clearly explain the frustrations they have had when trying to get their lenders to explain the penalty.  If you are currently exploring a move to another lender, and you need to know what your mortgage penalty will be, the best way to do this is to ask your lender to provide you with the penalty amount in writing (do not accept a verbal quote). 

Here below, is a template letter, which you can modify by inputting your own personal information:  your name(s), address, mortgage loan number.   Hand deliver this letter to your bank's branch manager, and you will receive a proper estimate, in writing.   Remember that if your bank is using the IRD caluation (Interest Rate Differential Calculation), your mortgage penalty amount can change from day to day, as interest rates fluctuate but at least if you have the estimate in writing, you have something to work with.

 

(Your address here)

(Today’s date here)

 

 

(Name of your bank)

(branch address)

Attention:    (name of branch manager, Branch Manager)

RE:    Mortgage #:    quote your mortgage number here

Dear (branch manager name here):

May I please have a current up-to-date “information only” payout statement, for my mortgage listed above, showing detail on what my penalty would be, should I decide to pay out the mortgage in full as of this date.  

I would like to receive this information within a reasonable timeframe:  5 business days.  

Please mail a copy of these statements, directly to my home address.   I look forward to your prompt response.

Kindest Regards,

(Your legal signature here)

 

(Your name here)

This article written by Elizabeth Blair on November 29, 2010.  Elizabeth is 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 any of her websites at:

www.missmortgage.ca

www.burlington-mortgage.ca

www.oakville-mortgage.com

www.streetsville-mortgage.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.

 

 

 

 

 

A new cash-back incentive for home buyers

Last night, my husband and I sat down and filled out paperwork to get our house listed on MLS.   As the decision to sell our house has been on the horizon for the past month, I have been following (…like a cat follows a mouse) developing changes to CREA rules and consumer access to the MLS.   

We were happy to discover, that on October 24, 2010, a challenge with CREA, spearheaded by Lawrence Dale, a Toronto Lawyer, resulted in a huge victory for home owners allowing them to pick and choose the realty services they want or don’t want.  These changes came, just at the right time for us, especially since we wanted to save on real estate commission costs but still wanted our home listed on the MLS system.

The completed paperwork went in, last night, to Realtysellers Real Estate Inc. (http://realtysellersrealestate.com/).  So our home should be listed on MLS today.  We know that the presence on MLS will increase the traffic through our home.  We also realize, that selling our home privately, will take some creative and active participation on our part, although we have already determined that we are willing to do the work necessary to save our money.   

After reading through all of the paperwork from Realtysellers, I was really delighted to discover just how creative their business model is.  Not only will they place my home on MLS at no charge, BUT they will also offer a cash-back incentive to the home buyer who finds one of Realtyseller’s registered home listings and buy it.    

Realtysellers has developed a business model that attracts both sides of the Real Estate transaction:   Sellers (people like me) and buyers too.  

Sellers get a free MLS listing and the option to choose how much commission they wish to pay to the realtor who brings in the buyer.  The seller can also determine how much additional service they want from Realtysellers, or do not want.

Buyers who buy a Realtyseller listed home, using Realtyseller’s registered realtors, get a cash-back incentive.

There is no doubt that buyers need a huge amount of savings, or available home equity to cover the costs associated with buying a home.  Here is a breakdown of how funds are divided up on a typical home purchase:

1. minimum of 5% of purchase price to buy a home (minimum of 20% of purchase price to buy a rental property);

2.  Ontario municipal land transfer tax (plus Toronto municipal land transfer tax if buy a property in Toronto);

3.  8% PST paid on your mortgage insurance amount (if your down payment is less than 20%);

4.  appraisal cost;

5.  insurance coverage;

6.  home inspection fee;

7.  GST if you are buying a newly constructed home under $400,000 and GST and PST if you purchase a home over $400,000;

8.  legal and disbursement fees;

9.  closing adjustmensts;

10.  title insurance;

11.  possibly interest adjustment;

12.  estoppel certificate.

Here is how this cash-back incentive works:   If a buyer, purchases a home that is listed on the MLS system with any real estate broker, using a Realtyseller’s Realtor, that buyer will receive cash back, paid out by the Brokerage, immediately after the Brokerage has received their commission amount, from the Seller’s agent.  The cash back paid out is a percentage of what the Seller paid as the agreed upon commission to the Brokerage.

While the free listing on MLS will certainly be a driver of business (which seems to be what everyone is talking about now....), Realtyseller’s cash-back incentive to buyers is the next big wave, which I believe, will sweep through the industry.   This option, like the free MLS listing, will also certainly generate huge interest in Realtysellers, once buyers (who are not already under contract!) find out that this cash-back option is now available to them.

This blog post was written by Elizabeth Blair on November 3, 2010.  Elizabeth is 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 any of her websites at:

www.missmortgage.ca

www.burlington-mortgage.ca

www.oakville-mortgage.com

www.streetsville-mortgage.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.