It is no secret that we all want low-interest rates, but some low rates have fine print attached to them which are not disclosed or overlooked by clients.
John and Jane are happily married and they are shopping for a home and a mortgage. They notice that some rates are slightly cheaper than other rates and are instantly intrigued by the 'mortgage special offer' they noticed online. They contact a mortgage professional and want the 'special offer', they ultimately would be saving $12 a month or $720 over 5 years.
2 years later, John and Jane decide to separate. It is decided that Jane will keep the home, she will give John some money from the equity of the home, he will be removed from the title of the home and then they will go their separate ways to live happily ever after.
John and Jane are having difficulty leaving their existing lending institution. The current offer to refinance their home is much higher than the competition and would save over $12,000 if they could make the switch. What they didn't realize, the 'special offer' had a bonafide sale clause attached to it and the only way they to leave their mortgage provider was to sell their home and the transaction needed to be at arm's length to be considered as a bonafide sale.
This is an actual case that we came across recently (I did not use clients real names). John and Jane used different mortgage professional to set up their original mortgage that apparently did not disclose this nor did their real estate lawyer.
It is important to always ask key questions when securing a mortgage; some of the questions are. Remember, a low rate may save you hundreds of dollars but the right mortgage product will save you thousands of dollars.
1 - Am I allowed to refinance my mortgage with another lender mid-term?
2 - What is your commitment to notify me/us if there is a competing lender that is offering a better rate mid-term and what is your process in doing so?
3 - Can you calculate my mortgage penalty right now?
4 - Does my existing lender have posted rates?
5 - If I can't contact you, can I have the contact information to your Associate or Assistant?
Thank you for reading! Feel free to contact me if you have any questions or feedback
John Panagakos
Separation Mortgage Expert
john@johnpanagakos.ca
416-570-5646