Hidden Mortgage Fess are making a Come Back.

It's never a good thing when banks are predicting their profits to slide - which is expected to happen in 2013. As Rob Carrick mentions in this article in the Globe, it usually means they're going to find other ways to ding customers - like through excessive mortgage breakage fees.

You've likely heard a few horror stories of friends or relatives who tried to get out of their mortgage early. Maybe they had to relocate temporarily, and opted to sell their home in favour of renting another. Or maybe they wanted to move to a larger home, and realized a little too late that the rock-bottom rate they were paying on their existing mortgage was low because it didn't include portability features. 

These stories don't usually end well - and often involve hefty interest rate differential fees (that compensate the bank for the money it would have made had you kept your mortgage through the agreed upon term) as well as a host of other fees, such as reinvestment fees, discharge fees and transfer fees. 
 
Before you ever sign on the dotted line of a mortgage, it's wise to inquire about what will happen should you opt to pay off that mortgage in full, move to a larger or smaller house or refinance down the road. If you already have a mortgage and didn't have your mortgage breakage fees explained to you upon signing, it's wise to look into it now. Just in case your future home ownership plans will require extra funds.

If you have any questions or are thinking about breaking your mortgage, don't hesitate to give us a call. We can explain the pros and cons of such a move in person, and help you minimize the damage.

A Brief HIstory of Mortgages in Canada

When you make your mortgage payment every month (or every other week, if you're into paying your mortgage off faster), have you ever wondered what your mortgage may have looked like 100 years ago? No? Well, below is a brief history of how mortgages have come to evolve in Canada:

The War Measures Act

Canada's first mortgage lending program took effect in 1918, under the War Measures Act. At this time, the Federal government was the only lender - it appropriated $25 million to the provinces, intended to be re-lent for the construction of residential units and mortgage loans.
At this time, the maximum loan was to be between 80 and 90% of lending value, or $4,500 - whichever was smaller. Annual interest was charged at 5%, with 20-30 year contractual terms. The weirdest thing about these loans? They weren't amortized. For that 20-30 year contract, mortgage holders were only required to pay interest periodically, with the entire amount due at the end.
The Dominion Act

The War Measures Act was replaced by the Dominion Act in 1935. The major difference here was that the government gave up its position as the country's sole mortgage lender, and instead joined forces with institutional lenders - namely, insurance, trust and loan companies.
Under this act, the government provided 20% of the lending value, with the private lenders providing between 50 and 60%. The interest rate was still set at 5%, but these loans were set at 10-year terms, with the provision for a 10-year renewal.
These loans were amortized, and the payments looked much like the payments you make today - equal payments made up of a combination of principal and interest.
The National Housing Act

The National Housing Act was first introduced in 1938, and was amended in 1944 and again in 1954, when it became the Act that we recognize today.
This Act came with a number of changes, the most notable being the introduction of banks as private lenders. Because of the post-war housing boom, Canada needed more private lenders - and this Act was designed to add more funds into the mortgage pool.