What is a prepayment charge?
If you decide to pay off your outstanding
balance before your term's maturity date, (or even an amount greater
than your allowable prepayment privileges), you may have to pay a
prepayment charge.
For Closed Variable Interest Rate Mortgages, this charge is calculated as three months' interest.
For Closed Fixed Interest Rate Mortgages and Home Equity Lines of Credit with fixed rate portions, the prepayment charge is the greater of either:
- three months' interest, or
- an Interest Rate Differential (IRD) amount, equivalent to the difference between your annual interest rate and the posted interest rate on a mortgage that is closest to the remainder of the term, less any rate discount you received, multiplied by the amount being prepaid, and multiplied by the remaining time left on the term.
For Open Mortgages, there are no prepayment charges for prepaying.
Prepayment Privilege
You can pay up to 15% of your original mortgage amount each year without a prepayment charge.
The following may help you to complete this calculator:
If you have a mortgage:
- Mortgage Loan Agreement or Mortgage Commitment
- Mortgage Renewal Agreement
- Annual Mortgage Statement
If you have a Home Equity Line of Credit:
- Amending Agreement to Line of Credit Agreement Real Estate Secured
- Home Equity Line of Credit Fixed Rate Portion Renewal Agreement
No comments:
Post a Comment