Thank you Globe and Mail for the inspiration for today's post:
Ever heard of mortgage cancellation fees? You soon might.
You are probably used to seeing cancellation fees from hotels, airlines and cellphone providers, but not when you’re getting a mortgage.
Such fees are slowly becoming more common as a small but growing number of discount mortgage brokers are tying cancellation fees to rock-bottom rates. Here’s why.
Many Canadians use mortgage brokers, who have access to multiple lenders, to get the lowest possible mortgage rate. To get the best terms, lenders require brokers to maintain high “closing ratios.” That means brokers must generally complete three out of four mortgages that they get approvals for.
But as mortgage shoppers become more informed and more rate sensitive, many become less loyal. And that is leading to an increase in costly cancellations, as borrowers use one lender’s approval to get a better deal with another lender or broker.
One may rightly ask, “What’s wrong with that?".
You can read the answer to that question here.