How (IRD) penalties work in Regional applications:
According to the statistics from Statistics Canada and CMHC – Approximately, 22,692 Niagaran’s per year break their 5 yr fixed rate mortgage with a two column format with a fixed rate mortgage, triggering the Interest Rate Differential penalty (IRD).
Statistics for Niagara (06/16):
447,888 people/consumers @ 27.9% mortgage holder rate = 124,961 residential mortgage holders @ 74.18% two column format mortgage holder = 92,969 two column format mortgage holders @ 60% fixed rate = 55,618 @ 68% 5yr fixed rate = 37,820 @ 60% early termination rate (breaking your mortgage before maturity) triggering IRD penalty = 22,692/yr. (multiply) net dif. on how IRD is calculated from two column format to one column format – $6,947.25 based on the averages (Regional mortgage balance @ $214,758, breakage in month 36/60) = net losses est. $157,646,997/yr. based on the variation from how IRD is calculated from a two column format to one column format.
By positioning my client’s with the appropriate lender for their needs with a competitive interest rate, but who calculates this penalty using a one column format – my client’s have the benefit of being removed from a position of risk before it ever happens. With a 60% early termination rate on the average 5 year fixed rate mortgage, in Canada, it is important client’s have flexibility in their term to make adjustments when needed to get the most from life. Keeping your money in your pocket, is what I do.
Thank you,
Cameron Wilson, B.A. | Mortgage Agent
Please contact me – 1 (800) 969-0014 | www.dominionlendingniagara.ca
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