First Time Home Buyers – Read The New Mortgage Rules Disclosure

Years ago prior to my real estate career I took out a high interest rate mortgage without paying attention to the IRD penalty clause for breaking a mortgage and soon realized the consequences when I broke my mortgage contract to shift to a lower interest rate. How much penalty I had to pay? A whooping $16,000!!!!

Not only I took out a wrong mortgage I didn’t received a proper advice and were given what I thought the only option available to me. Starting March 5th 2012 this practices is about to change!

Going forward, federally regulated financial institutions must disclose the following to borrowers:

1. The method (formula) for calculating the exact prepayment charge in language that is clear, simple and not misleading
2. Where the penalty formula is complex (e.g., uses present value), a simple way to estimate penalties
3. A description of all inputs used in the penalty formula (including things like posted rates at origination, future value outstanding balance, all applicable interest rates, bond yields, etc.)
4.Information on how to obtain each of those formula inputs (or the actual values themselves)
5.An example and/or worksheet to help consumers figure out their own prepayment penalty

To read more about these changes visit Canada Mortgage Rules.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: