Exploring the Impact of Recent Changes at National Bank and Other Major Financial Institutions
There are big changes happening at the big banks right now. National Bank took the unprecedented step of removing portability for all its mortgage customers. Also with higher interest rates, the banks are extending mortgage amortizations to make payments more affordable.
Let’s look at these changes and more.
National Bank takes away portability, then reverses course
National Bank received a lot of coverage when it removed portability for its mortgage customers.
This is a big deal. In case you’re not familiar, portability is when you go to move properties and you can take your existing mortgage with you. This is an important feature to have. Without mortgage portability, you could be forced to pay a costly mortgage penalty in the tens of thousands if you go to sell your home before the end of your mortgage term.
National Bank removed the ability to port all its mortgages earlier this year. Erica Alini of the Globe and Mail wrote an excellent article on it. What irked a lot of National Bank’s mortgage customers is that it did it quietly, without letting its customers know. This didn’t sit well with National Bank customers, who only found out that they couldn’t port their mortgage when they inquired about it later.
National Bank was technically within its rights not to communicate the change to its portability policy to its customers. That’s because portability isn’t mentioned in its standard mortgage terms and conditions like most other lenders. However, this didn’t make its customers feel any better. National Bank customers felt like the bank should have been proactive and let them know that they were taking away portability.
Erika Alini uses the example of a couple who wanted to port their mortgage and buy a new home but had to put their plans on hold due to a costly mortgage penalty.
Thankfully the story has a happy ending. After much public pressure and bad press, National bank decided to reverse its decision. Borrowers can breathe a sigh of relief, but it just goes to show you how much power the big banks have over us.
The big banks extending mortgage amortizations
This isn’t the only big change. To cope with higher interest rates, the big banks are looking to make some dramatic changes. For those with variable rate mortgages, some who have seen their mortgage payments go up by $1,000 per month or more, the banks are bending over backwards to help keep their mortgage payments more affordable and keep borrowers from defaulting.
In some cases, we have seen 60 and 70 year mortgage amortizations at the likes of TD, RBC and CIBC. This makes your mortgage payment more affordable but can end up costing you a boatload more of interest.
In some cases, with amortizations like these, you may be paying for your home three or four times over, once all the interest is factored in.
Mortgage brokers are in your corner
Looking for someone who has your best interests at heart? Turkin Mortgage Team have you covered. Brokers have access to lenders outside the big banks that tend to have a lot more generous terms and conditions.
Before making any major mortgage decision, it’s always a good idea to speak with broker and get a second opinion.
In conclusion, the recent changes at National Bank and other major financial institutions have had a significant impact on mortgage customers. National Bank’s decision to remove portability for all its mortgage customers caused confusion and frustration for many, but ultimately, the bank reversed its decision following public pressure. Additionally, with higher interest rates, the big banks are extending mortgage amortizations to make payments more affordable, but this comes at the cost of paying more interest in the long run. It is important for mortgage customers to stay informed and consider all options, including speaking with a mortgage broker who can provide a second opinion and access to more generous terms and conditions from lenders outside of the big banks.
