15 Jan

Got a Big Bank fixed rate mortgage and want to pay it off in full? Uh-oh.


Posted by: Michael James

I see this time and time again.

Clients have opted for a fixed rate mortgage with their bank – a chartered bank – and they find out the ‘great’ rate they signed up for comes with a massive curveball!

IRD – Interest Rate Differential – get to know this term.  It is scary.

To get the market rate received, the bank gave you a ‘discount’ off their posted rate.

This posted rate is used in their interest calculations on full pre-payment.

Your 5 yr fixed at 2.99% or 3.09% had a discount of 1.8%-2.15% (from 4.79, 5.09 or 5.24%).

At the 3 yr mark, the posted rate could be 3.44% is deducted from the posted rates at the time of your mortgage.

The applicable posted rate less this 3 yr rate (or 1, or 2 or 4 as applicable) can generate a rate differential of 1.35% to 1.80% times your mortgage balance times the time remaining.

Example: 3.09% Big Bank fixed needs to be ‘broken’ after 2 years for whatever valid reason.

Balance $500,000 x 3 years (36mos/12) X 2.15% rate differential = $ 32,250 penalty due.

A broker channel lender with whom I work with – the penalty would be 3 months interest – as they don’t have the posted rate model.  Penalty = 500,000 x 3.09%/12 x 3 = $ 3862.50 penalty due.


Did you see the difference?

Broker Penalty : $3862.50

BIG Bank Penalty: $32,250

Which one would you prefer to pay?

Why not consider using a mortgage broker and save yourself down the line!

It is $28,000 question!


Yours in Mortgages,

Michael James

14 Jan

6 Tips to Help Renew Your Mortgage


Posted by: Michael James

6 Tips To Help You Renew Your Mortgage

A common statement that many of our new clients that come to us when their existing mortgage is up for renewal is “ we are so glad that we called you”. Or ” I am so happy that I did not just sign the original offer from my current lender”

This is a recurring problem that happens to most people at the end of their mortgage term. The existing lender will send out a renewal statement with their current mortgage offerings. This statement is sent in the hopes that the client simply signs the lenders offerings without doing their research. This hasty action ends up costing the mortgage holder thousands if not tens of thousands of dollars over the term of the mortgage and essentially extends the time it takes to pay it off which is exactly what the bank wants.

Here are 6 useful tips to help you avoid this same mistake

  • Get Going Early.
  • Do Your Home Work.
  • Never Accept The Banks Posted Rate.
  • Negotiate.
  • Change Lenders.

With over 50 lenders to choose from, I can always find the right mortgage with the best available interest rate. Contact me before your mortgage is up for renewal, I can help you get the best mortgage for your home. I look forward to hearing from you.

5 Jan

Some 2015 insight to the year ahead – housing and rates.


Posted by: Michael James

As 2015 whips into gear, here are some borrowed quips on the rate forecast and housing market insights for the year to come….