Ask Leo A Question

When you’re considering applying for a mortgage loan, refinancing, or buying an investment property – nothing beats getting the advice of a seasoned mortgage professional. Submit your question now and you’ll receive a response from Leo Lee within 48 hours. And don’t worry none of your personal details will ever be published without your explicate consent.

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Recent Question & Answers:

Q:

I currently have a high interest 5 year fixed mortgage (7.29%)I have 3.5 years left on the term, amortized over 40 years. I owe $233,287.78 – it was a cash back mortgage, I received approximately $7,000 cash back.

I would like to switch institutions as well, from CIBC to ING direct, and change my amortization period to 25 years, and change the term to 3 years, the rate ING is offering is 3.59% for 3 years.

Now for the question I’m wondering what my penalty will be, and if it’s worth switching – also wondering if I have to pay the penalty upfront, or can I roll the penalty over into a new mortgage amount?

Thanks again for your help!

A:

I rather suspect your penalty is going to be horrendous. Most likely it will be based on the difference between your present mortgage rate and the CIBC’s 4-yr rate for 3.5 years. Plus most likely there will be a crawl back provision for the cash back you received. Is it going to be worth your while, I would recommend you contact the CIBC to find out about your penalty first and consult a good local mortgage broker who can do the calculation for you to see if it is going to be beneficial for you. I can’t really tell without knowing what you have to pay. Whether ING will allow you to add the penalty to your mortgage will depend on a lot of things, such as the loan to value and ING’s policies. I’m afraid I cannot help you much from afar. Good luck.

Q:

How to reduce/minimize IRD penalty.

A:

Generally speaking, you can’t.  It is basically a contract, part of the mortgage arrangement you’ve signed.  That’s why one needs to understand what it is before hand.

Q:

HI Leo.
I am having an appointment with my lender on Friday. Are there any special tips that I have to talk to them so that they can refinance my mortgage without any penalties and good rate of interest. Help will be very appreciated.

A:

Talk to them about “blend and extend”.  That means they will provide you with the additional funds you need (assuming you qualify) at current interest rates and new term and amortization (presumably longer than what you have left).  They should be able to “blend” the new rate with your existing rate in some kind of portioning between your current mortgage balance and the new funds to come to a new rate.  You may or may not need new terms to make it work.  If it is high ratio and to be mortgage insured by, say, CMHC, then the insurer will also need to approve.

Q:

Will a  new lender assume part of my interest differential penalty from the old mortgage?

A:

I doubt it.  Let’s put it this way, I have never run into a single one who will accept a switch from another lender and pay of part or all of the penalties as well.

Q:

I’ve been bankrupt and I want to establish my own credit through investing in Real Estate. I’m worried that I will have a very hard time getting a new mortgage.

A:

Have you been discharged and, if so, for how long?  And what have you been doing to rebuild your credit so far?

As long as you have a clean credit record since discharge, I can help you get a mortgage and get re-established.  Contact me again if you need help.  I have lots of clients in Ontario.