When you take out a mortgage on your downtown Toronto real estate, you aren't just borrowing money, you're also entering into a contract with the bank. You and the bank both agree to abide by certain terms. Failure to abide by those terms sometimes results in a termination of the mortgage loan, but more often results in financial penalties. As you might expect, these penalties are almost always charged to the borrower, not the bank. Before you borrow, you need to know all about penalties. We can help you.

Banks want to get as much money out of you over the course of the mortgage as they can, so often they impose penalty fees when you take actions that benefit yourself rather than the bank. For instance, if you want to renegotiate the interest rate on your mortgage in Ontario, you'll have to pay a penalty. If you want to make bigger payments or more payments to save on interest over the life of your mortgage, you'll have to pay a fee.

All mortgages are different, so before you choose one for your lofts, Toronto's mortgage brokers should be consulted so you can see all of your options. Make sure you know where potential penalties may lie, and most importantly, how they will calculate the amount of the penalty. This will save you from being surprised by a fee amounting to thousands of dollars when you decide you want to take advantage of the new lower interest rates. Many banks now have online calculators that can help you figure out your fees.

Banks each calculate their fees according to their own schedule, but a typical amount for a variable rate mortgage penalty is about 3 months of interest. For fixed rate mortgages, it can be the three months interest PLUS the difference between your new interest rate and your old one, so be careful when making your house plans because this can add up to a lot - sometimes as much as $20,000!

If you do decide to go ahead with an action that's going to cause you to incur fees, it's extremely important that you calculate the amount of the fee and balance it against your interest savings in the long run. It may surprise you to know that swallowing the fee will not always save you money on your mortgage in Mississauga, so talk to your broker before you do anything that can't be undone.