• Do mortgages exist that have no penalty but a guaranteed rate. The short answer is yes, but the reality is that they are not a product you want.

    This video blog goes into this type of mortgage and answers the question for Canadians: “Can you have your cake and eat it too in the mortgage world?”


    Transcript of Video Blog:

    So you’re wondering, can you have your cake and eat it, too? Can you have a fixed rate mortgage that has no penalty to pay it out? The answer, in Canada, not if you are going to be getting fully-discounted rates.

    Some institutions do offer one-year or six-month fixed rates, but they are rates in the 6.45% and 6.55% range, and they are generally not something anybody opts for. The product does exist, but in Canada you really don’t get to take advantage of it.

    Down with our neighbors to the south, the Americans are quite used to taking the long-term mortgages, 30-year amortizations and 30-year terms and having no penalties to get out of their mortgage. They can break it at any time they want.

    This is a substantial advantage they enjoy, that their banking system allows. Now having said that, many Americans actually end up paying a fee just to set up a standard mortgage. While we in Canada, generally, don’t have to pay a fee unless there are some quirks or other things to do with your mortgage that don’t fit the bank “box.”

    I, as a broker, don’t charge any lender fees, any lender or broker fees. I, as a mortgage broker, do not charge any broker fees on a standard residential bank mortgage.

    There are times when we do have to charge fees, and a lot of it has to do with foreclosure bailouts and bankruptcies and whatnot like that, but that is not for the standard mortgage you are getting renewal or purchase or whatnot, and you qualify for it.

    If you’re looking at those rate sheets and you’re wondering “Wow, the variable rate is great but I’ve still got to pay a penalty. I would really like a fixed rate, but I don’t want to be stuck for five years.” Unfortunately, you can’t have your cake and eat it too in this industry. I’m sorry. For the Mortgage Centre, I’m Rowan Smith.

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