In an advice piece published at the Dominion Lending Centres website, accredited professional Pauline Tonkin pointed out that the inherent complexity surrounding the industry shouldn’t discourage would-be borrowers from finding out as much as they could before drawing out a mortgage.
“Knowing the exit cost of your mortgage is an important part of the decision in choosing a lender and many people don’t realize this until it is too late,” Tonkin wrote.
“The majority of long-term fixed-rate mortgage holders terminate or change their mortgage before their term is up. In fact, the average five-year mortgage lasts only three to four years. Penalties apply in only a minority of these cases, but for those who are affected, they can substantially raise your overall borrowing costs,” the broker warned.
Tonkin argued that it is incumbent upon the mortgage professional—who has far greater familiarity with the loans sector, after all—to enlighten the consumer about their refinancing options.
“As a broker I always discuss the true cost of mortgage penalties with my clients to ensure we work with lenders that have best options for penalties if ending the term is a possibility for any reason,” Tonkin said.
Consumers should be wary of the true cost of any mortgage before borrowing and be prepared to take a closer look at any offer that might seem too good to be true, according to a B.C.-based professional.