Quote:
Originally Posted by GGG
It also makes sense to use a posted value rather than the actual rate as the costs for termination for the bank will be fixed as the variance in rate between different clients is the cost of the difference in risk between two clients. SO whether a person has a 2% discount or a 3% discount the cost of early termination to the bank is the same.
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It’s really whether or not you fit their lending criteria. Yes or no based on debt servicing and credit/income requirements. There’s really no sliding scale for rate proportionate to risk. Your negotiating skills can impact your rate however.
Sure the commitment/renewal letters may include details on how their penalties are calculated, but I’d be willing to bet VERY few people understand the difference between being calculated on posted vs contract. To my knowledge, no lenders outside of banks (ie monoline lenders) base IRDs off posted rates.