10 Questions to Help Avoid Mortgage-Penalty Shock

Figuring out the penalty on a fixed-rate mortgage is like solving a calculus equation. Homeowners who try often wind up hitting their head against hard objects in frustration.

It’s been that way for years, and as many unwittingly discover, mortgage penalties can be disturbingly expensive.

Historically, lenders have used cryptic penalty language that disguises just how expensive. As a result, folks trying to break their mortgage are routinely shocked and disappointed by four- or five-figure penalty quotes.

But things are changing for the better. As of this month, the Department of Finance has convinced banks to peel back a layer of opacity. Most banks now agree to a “voluntary” Code of Conduct that requires them to post plain-English explanations of prepayment charge calculations and provide website calculators so people can run their own penalty estimates.

That latter development is a colossal win for mortgage consumers.

To read the complete story, please visit the Globe & Mail.