How mortgage penalties affect the local Greater Hamilton economy

According to the statistics from Statistics Canada and CMHC – Approximately, 40,492 Greater Hamiltonian’s per year break their 5 yr fixed rate mortgage with a two column format with a fixed rate mortgage, triggering the “Interest Rate Differential penalty (IRD).

Statistics for Greater Hamilton (06/16):

785,160 people/consumers @ 28.4% mortgage holder rate = 222,985 residential mortgage holders @ 74.18% two column format mortgage holder = 165,410 two column format mortgage holders @ 60% fixed rate = 99,246 @ 68% 5yr fixed rate = 67,487 @ 60% early termination rate (breaking your mortgage before maturity) triggering IRD penalty = 40,492/yr. (multiply) net dif. on how IRD is calculated from two column format to one column format – $9,202.31 based on the averages (Regional mortgage balance @ $286,351, breakage in month 36/60) = net losses est. $372,619.936.52/yr. based on the difference from how IRD is calculated from a two column format to one column format – objective advice is valuable and if acted on by the consumer, Greater Hamilton’s mortgage holders, would retain an est. additional – $372,619.936.52 per year in reduced mortgage penalty fees.

Statistics for Canada (06/16):

36,290,000 people/consumers @ 28.7% mortgage holder rate = 10,415,230 residential mortgage holders @ 74.18% two column mortgage holder = 7,726,017 mortgage holders @ 60% fixed rate = 4,635,610 @ 68% 5yr fixed rate = 3,152,215 @ 60% early termination rate (breaking your mortgage before maturity) triggering IRD penalty = 1,891,329/yr. (multiply) net dif. on how IRD is calculated from Chartered Banks/some Credit Unions to Credit Unions/monoline lenders – $8,246.77 based on the averages (National mortgage balance @ $271,895, breakage in month 36/60) = net losses up to est. $15,597,355,257.33 per year, based on the difference from how IRD is calculated from a Chartered Bank/some Credit Unions to some Credit Union/Monoline Lender. objective advice is valuable and if acted on by the consumer, Canada’s mortgage holders, would retain an est. additional – $15,597,355,257.33 per year in reduced mortgage penalty fees.

I share with my clients, why and how, the difference in calculation occurs. This information is presented in a straightforward and easy to understand fashion. I enjoy sharing this with you – so you are better able to navigate the complex mortgage policies of today’s lending landscape.

By positioning you with a different lender with excellent interest rates, but who calculates this penalty differently than a two column format – my client’s have the benefit of being removed from a position of risk before it ever happens. I welcome all new clients to work with me and enjoy the security, my knowledge and experience provides.

Thank you,

Cameron Wilson, B.A. |  Partner Hamilton Health Sciences Foundation | Mortgage Agent

800-969-0014 |  www.dominionlendingniagara.ca

Articles on (IRD) penalties:

https://montrealgazette.com/business/class-action-suit-filed-against-canadian-banks-over-mortgage-prepayment-charges/

https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-big-banks-prepayment-charges-give-reason-to-consider-fair-penalty/

https://www.cbc.ca/news/canada/edmonton/td-bank-client-devastated-by-17-000-mortgage-penalty-1.2790108

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