Disclosure statements are clear in showing how much interest you will pay over the term of your mortgage. The statements could be clearer on how prepayment penalties are calculated, with examples.
Quote:
Both clients described the calculations behind the penalties they paid as incomprehensible. The first, who decided to sell her property after making two years of payments, had to pay an “IRD” charge of $12,648 to the Toronto-Dominion Bank, instead of the prepayment penalty calculated on three months of interest, which would have been $2,247.
A second client, dealing with CIBC, was ordered to pay $29,340 instead of the three-month interest penalty of $5,788.
“The difference is objectively abusive, excessive and disproportionate,” the class-action application states.
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Would these clients have entered into these mortgages if they knew how big these penalties could be?
Sometimes you can convince the bank to waive the penalty, if you get another product with them.
Sometimes the mortgage with the lowest interest rate, is not the best product for you.