Scotiabank Mortgage Pre-payment penalty?

[jonnycat]

Does anyone know if they have a standard % charge on full payout?

Also do you know if you can you convert their Mortgage to a Heloc, which then could be paid out with no penalty?

Thanks.

[sputnik]

Pre-payment penalties are never "standard".

You will need to talk to your bank.

[Tik-Tok]

Originally posted by jonnycat

Also do you know if you can you convert their Mortgage to a Heloc, which then could be paid out with no penalty?


If you have enough equity in your home, when your mortgage term is up, you can definitely get a Heloc instead of conventional mortgage. They aren't going to let you just convert it mid-term though (without penalty).

I've been considering getting a HELOC when my mortgage is around $100g. If rates are still decent, I figure I can make more money paying only the interest on $100g (call it "rent"), and investing the rest of what would have been my monthly payment, then just paying the mortgage like normal.

[max_boost]

Yea I just convert to HELOC and then MAX it out to BUY things. :D

[Weapon_R]

Scotia is 3 months interest or Interest Rate Differential, whichever is higher.

[jonnycat]

Originally posted by sputnik
Pre-payment penalties are never "standard".

You will need to talk to your bank.

Just waiting on call back, but was hoping to have some ammo lined up for negotiations. Thanks.


Originally posted by Tik-Tok


If you have enough equity in your home, when your mortgage term is up, you can definitely get a Heloc instead of conventional mortgage. They aren't going to let you just convert it mid-term though (without penalty).

I've been considering getting a HELOC when my mortgage is around $100g. If rates are still decent, I figure I can make more money paying only the interest on $100g (call it "rent"), and investing the rest of what would have been my monthly payment, then just paying the mortgage like normal.

I'm one year in to a 5 year fixed. May need to wait depending on penalty size.

Originally posted by max_boost
Yea I just convert to HELOC and then MAX it out to BUY things. :D

Definetly. gonna buy a Vette or GTr or 911 asap!

i kid, lol

[Masked Bandit]

Originally posted by max_boost
Yea I just convert to HELOC and then MAX it out to BUY things. :D

Winning formula right here!!!

[benyl]

Originally posted by jonnycat

I'm one year in to a 5 year fixed. May need to wait depending on penalty size.


Penalty will be pretty big.

Basically, you have to pay all the interest that you would have paid over the 5 years.

The bank still has to pay the bond holder of your mortgage.

[Tik-Tok]

Originally posted by Masked Bandit


Winning formula right here!!!

Nope. The winning formula is to find a rich sugar-momma, and max HER heloc out, lol.

[jonnycat]

Originally posted by Weapon_R
Scotia is 3 months interest or Interest Rate Differential, whichever is higher.

$1425.00 Doable



Originally posted by benyl


Penalty will be pretty big.

Basically, you have to pay all the interest that you would have paid over the 5 years.

The bank still has to pay the bond holder of your mortgage.

$27,000. Not doable. Fuck I hope you are wrong. $1425 would be so much better. My last mortgage I believe was $6000 penalty with ING Direct, on a higher mortgage with a higher rate.

[Tik-Tok]

Originally posted by jonnycat


$1425.00 Doable


How on earth do you come up with that? Interest differential will be WAY more than 3 months interest. Unless you paid posted rates when you renewed.

Did you do the calculations?

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/interest-rate-differential-ird.html

[project240]

I just inquired about this with our bank and the payout was around $2500... we're 2 years into a $325K, 5 year mortgage

[rony_espana]

I had to pay over $9k penalty and I only had a year remaining on my mortgage with TD. I resigned with them so I was reimbursed, but still sucks.

[triplep]

doesn't it depend on what type of mortgage is issued?

For example variable is just 3 months interest, while a fixed is interest differential?

Honestly, once you get the phone call that will be your best answer. And don't ask them if it will be EXPENSIVE to buy out, ask them how much.

My parents were going to pay of their house, and the bank told them it is expensive to pay it out, turns out in the end it would have only cost them 2-3 grand versus paying another years worth of interest payments.

so if you don't ask you will not know.

[tpurcell4]

The IRD calculation Scotia does not release, but here is the general calculation by the major banks:

Balance remaining x (Contract rate - (new rate for term remaining - original discount off posted rate)) x term remaining

Example:

$250,000 mortgage
5.09% 5 year rate
2 years remaining
New rate 3.09% (current 2 year)
Original discount off prime 0.75% (usually between 0.75-1.75%)

IRD =
250,000 x (5.09 - (3.09*-.075)) x 2
= 250,000 x (1.25%) x 2
= $6,250

3 month Int =
250000 x 5.09% / 4
= $3,181.25

Your penalty would be roughly $6,250

You will need to contact Scotia for the most accurate penalty, but this will give you a decent approximation should you know the original discount you received.

Cheers,

Todd

[benyl]

Since he still has 4 years left, you have to double your calc.

[jonnycat]

I don't know what my original discount was. I used a broker who told me scotia's posted was 3.59%, so I entered 0% in the discount field. I filled out the chart like this;

$155,000 Balance
3.59% current
0% discount
45 months remaining
4.29% comparison rate

=$1400 3 mos interest or -$4000 IRD.


With a 1.75% discount it ups it to $6,100.

[tpurcell4]

Over the last year posted has not changed much, so their 5 year posted would have been roughly 5.29% which would put your discount around 1.70%.

I highly recommend contact Scotia to get the true penalty number.

[tpurcell4]

^^

They also tend to run the penalty calculation off of their floor discount rate which is at 3.19% for a 3 year term (as they look round down).

Good luck, and hopefully it works out!

[jonnycat]

Still waiting for a call back.

Thanks!

[tpurcell4]

^^
You're welcome!