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PostPosted: Fri Jan 23, 2015 10:37 am 
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Joined: Wed Jul 21, 2010 6:14 am
Posts: 62
Location: Milton, Canada
Hi Milton

With record low rates it may be a good time to look at the numbers and explore whether breaking your existing mortgage will save you money over the short to medium term.

Costs and penalties are always the concern and restriction. Here's a solution:

The catch:
To avoid legal and appraisal costs, one typically has the option of doing a "No Fee Switch" where you move your existing mortgage to a new bank which pays your legal and appraisal fees. The issue though in most cases is the penalty to break the existing mortgage is higher than the allowable mortgage increase with the new lender, which ranges around $1,000 to $2,000, depending on the bank and the whether the mortgage is conventional or high ratio. In many cases, the penalty exceeds this amount, thus leaving the mortgage holder with three options:
- stay where they are at the higher rates
- do the no fee switch and pay the penalty
- refinance the mortgage to include the penalty and pay the legal and appraisal costs to move

The solution:
We have a fairly exclusive relationship with a bank that will take over the mortgage and will do the following:
- allow the penalty to be included in the new mortgage
- pay the legal fees
- reimburse the appraisal cost after closing
- very competitive low rates
- great flexible product that converts into a HELOC (Home Equity Line of Credit), at no cost, as the mortgage is paid down making a great vehicle to "park" that extra cash which reduces the interest on the mortgage
- one other very attractive benefit that I do not want to disclose here.

So now we are able to do a "No Fee Switch Refinance" and include the restrictive penalty. Important though to check the numbers to ensure the move is cost effective and in your best interest.

Kind regards

_________________
Warwick Johnston
Milton Mortgage Specialist at RBC
647-274-6029


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