I am passing along this important information courtesy of my friend and mortgage broker Laurie Foster of VERICO One Link Mortgage.
What is the difference between 2.44% vs. 2.59%
In an effort to provide you with the most accurate up to date information possible we wanted to give you some information about the 2.44% 5 yr fixed rate offering which has been advertised.
While this is a product we have full access to we always want to ensure that clients know both the advantages and disadvantages of what is offered so they can truly make a decision based on an apples to apples comparison. We always try to get the client the absolute best rate available to them but we like to ensure that they know all of the potential outcomes of taking this rate. While this does provide a client with a lower up front rate, this product can be quite punitive to clients should they need to make any changes to the mortgage.
Should an instance arise where the client needs to payout or discharge this mortgage early, this particular product has a penalty assessed on the client which is the greater of a 3 month interest charge, the interest rate differential penalty OR 3% of the balance of the mortgage at the time of discharge/payout.
For example on a $250,000 mortgage, the client would be assessed a minimum penalty of $7,500 should they need to discharge the mortgage or pay it out on sale.
When we compare this same example to the discharge of a full service mortgage with one of our preferred lenders the difference is significant.
On this same $250,000 mortgage using a full service product with a rate of 2.59% on a 5 yr fixed rate mortgage, using today’s rates, the client would only be assessed a 3 month interest charge equalling $1,618.75, which is $5,881.25 less than the 2.44% rate offering would result in.
When we have presented this information to clients and they weigh out the potential advantages of the slightly lower rate vs. the potential for incurring a large guaranteed penalty on the back end the vast majority decide in favour of the greater flexibility offered with the full service mortgage term.
Should you have any questions at all please don’t hesitate to reach out to either Laurie or Ryan and we’d be happy to answer your queries.
Laurie & Ryan
Laurie Foster, AMP Ryan Godin, B. Comm (Hons)
VERICO One-Link Mortgage & Financial Associate to Laurie Foster, AMP
Unit 100-99 Scurfield Blvd VERICO One-Link Mortgage & Financial
Winnipeg, MB R3Y 1Y1 Unit 100-99 Scurfield Blvd
Phone: 204-981-2354 Winnipeg, MB R3Y 1Y1
Fax: 204-480-4179 Phone: 204-979-0077
Email: email@example.com Fax: 204-480-4179
http://www.lauriefoster.com Email: firstname.lastname@example.org