Confusing Mortgage Penalties made easy through New Code
If you have ever tried to break a Toronto mortgage early you know that you will be up for some pretty expensive penalties. The process itself is tedious to say the least. However not every homeowner manages to pay off a mortgage payment before term ends or take it to other lenders in the hopes of a better interest rate. This is why a new code of conduct has been introduced.
Once the new code is initiated it will make Toronto mortgage prepayment and breaking one easier than it ever was. According to the Financial Consumer Agency of Canada the code is part of an effort to help borrowers know what they are getting into when it comes to making informed decisions about their mortgages. It will also ensure that banks provide them accurate information about mortgages and the costs that are associated with them. Some of the measures include the following –
A prepayment penalty is based on a certain number of month’s worth of interest or a certain percentage of the remaining balance of the mortgage.
A lender must state what a charge will be if a borrower happens to pay a Toronto mortgage payment early. The lender will take into account any events that will cause the charge to change over time and describe how the charge is calculated. The statement will also show the amount of any charges that the borrower will have to pay back.
Borrowers are now entitled to receive details of any prepayment privileges on their annual statements. The statements in question will provide Toronto mortgage holders a number of options that will allow them to pay their loans faster without having to pay penalties.
Lenders now promise the possibility of better penalty calculators on their websites. For example, this would be beneficial for a borrower to calculate any prepayment penalties on his Toronto mortgage. Such a convenience will make it possible for homeowners to make informed decisions about their mortgage situations.
In addition a lot of lenders have also decided to educate their clients on the basics of mortgage payments especially on topics like fixed, open and closed mortgages.
These are only some of the trends that will be the norm once the new code of conduct is put into full effect. The code is still available on a voluntary basis for now. In other words financial institutions are not obliged to comply with it. However many lenders or banks do plan on embracing the new changes in the hopes that it will make it easier for Canadian homeowners to make mortgage decisions based on current market trends.
Mortgage prepayments make up one of a homeowner’s biggest expenses. Even owners who prefer paying their mortgages off faster do have to deal with prepayment charges. Once the new code is put into effect consumers will be able to make decisions according to current information and how the charges will be calculated.