A Toronto man is warning people to take a close look at the penalties they’ll face for breaking a mortgage before they lock in, after his paperwork didn’t include important information that would have saved him more than $10,000 in fees.
“I was frustrated that a key piece of information hadn’t been disclosed to me,” Nadim Kara says.
“Particularly as that piece of information wasn’t in the mortgage contract so I had done what I thought was my due diligence and you know, I read the papers. I read the contract, I called them, I check in online.”
Mortgage contracts have to disclose all information on penalties for ending a mortgage early and how they will be calculated.
Kara didn’t know it then, but missing from his mortgage contract was information about a little known rule — homeowners with a fixed term longer than five years can only be charged a penalty of three months’ interest if they break their mortgage after the fifth year, not the much higher interest rate differential fee.
In Kara’s case, if he had waited just 60 more days, his penalty would have shrunk from $13,000 to $3,000.
While Kara’s issue has now been resolved, he’s frustrated no one is taking responsibility and worries other Canadians may be paying higher penalties than they should be.
In 2012, Kara and his wife moved from Ottawa…Read More