Mortgages and financial stuff are complicated and boring, right? I get that for sure. Believe me, I sometimes have to slap myself to see if I am still alive due to the nature of my work.
Everyone knows cars though, right? We all know the ONLY THING that matters is the SALE PRICE, right? When shopping for a car we do not care about the COST OF OWNERSHIP or SAFETY RATING, right? Some of you maybe be thinking, “hey, when I buy a car there is obviously more I consider then the SALE PRICE.”
Well, a mortgage is no different!!!! A car’s sale price is like a mortgage’s interest rate but have you considered whether the lender calculates their IRD penalty (Interest Rate Differential penalty) using a “posted rate” or do they use the “contract rate” – this portion of a mortgage is the COST OF OWNERSHIP and if you do not think it is important, see what this family and thousands of others have went through by being FIXATED with ONLY the rate and thinking that is all a mortgage is, simply just a rate.
Remember, on a $300,000 mortgage, the difference from 2.69% to 2.79% over a 5yr term with a 30yr AM is ***$960*** or ***$0.22 cents/day***
Whereas, the difference (on the thing that no-one knows about or thinks matters – IRD penalties) can be a $12,000 penalty vs a $3,300 penalty. That accounts for difference of ***$8,500*** or $4.60/day.
Canadian’s on average break their 5yr fixed term over 60% of the time!!!!!!
Not all lenders calculate IRD with “posted rates” but all Big Banks do
There is a lot more you do not know, unfortunately. I would happy to share it with you, that is why I became a Mortgage Agent, to help others and in helping others, help myself. Win-win.