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Posted on July 27, 2007 by Gregory van Duyse | Posted under Finance
The most common situations that lead to a penalty (taux hypothecaire)
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(This article is part of a series on the topic of mortgage penalties. There may be a topic that is of particular interest to you, you should check to see if it is expressly addressed in one of the articles. The list is included at the end of this article.) The penalty which is charged by lenders because you have paid the balance of your loan before the end of the term of the loan can often be avoided, but in some situations, you may not have a choice. Here are those situations: The sale of your home: Selling your home does not mean that you necessarily have to break your mortgage contract and be subject to penalties (find out if your mortgage is portable, for example), but if you are not going to buy another home, or are moving outside of the country, you will have to pay the early payment penalty. Don't despair; if you read our article How to lower or avoid a penalty?, you may be able to save some money. Refinancing for debt consolidation Mortgage refinancing is an excellent way to consolidate debt and allow people to get themselves resituated, financially. It works really well for most homeowners. However, it is important to be careful about the way it is done. It may be a better idea to take out a second mortgage instead of consolidating one mortgage, especially if there is not much time left on your mortgage. A qualified mortgage advisor will be able to calculate the best ways to handle situations such as this, since each situation is different and requires a different solution. Refinancing for renovations: As a rule, when you perform a renovation, you require money to do it. If you are in a situation where you have decided to renovate, consider these ideas that will help you save money: There is some work to your home that may have to be done right away because it is urgent work. If this is your situation, you may want to consider taking out a personal loan or a line of credit instead of negotiating a new mortgage. Once you do a new mortgage, the old loan can be incorporated into the new one and be paid off. If you want to renovate your home, in order to sell it, or so that you can get a higher price for it, you should think about an open mortgage to finance these types of renovations. With this type of mortgage, you will not have to apply for a second mortgage, or incur prepayment penalties. Don't forget that if you want to renovate property that you are going to buy soon, there are some mortgages which have a renovation loan option. You can then borrow the money right away for renovations you will do in the future. Marriage separation: If a couple separates, the most common occurrence is that one of the partners will buy out the home from the other. In this instance, most banks do allow the new owner to simply have a balance transfer rate for any additional funds. This is not always possible; the income of the partner taking over the mortgage may not be sufficient to procure a new mortgage. If you have such a problem, please contact our office to see if you can avail yourself of a specialized product called a self declared revenue loan to get the mortgage. You probably will still have to pay the early payment penalty, but you can keep your home in this manner. When a will is executed: In the case of death of the owner of a home, the property often has to be liquidated in order to meet the requirements of the will. Some lenders will waive the early payment penalty fee in such cases. You just have to do the research and find out for yourself. Carefully consider your options Before making any decision that will lead to a penalty, discuss your situation with an accredited mortgage counselor (CHA) to find out whether there is not an alternative solution. Mortgage penalties costs thousands of dollars; it is worth the time and troubleit may take you to find out how to avoid them. About The Author: Gregory is an Accredited Mortgage Professional (AMP). To get more information on mortgage rates - taux hypothecaire, please visit: Mortgages - hypothèque |
Tags: MORTGAGE BROKER, MORTGAGE, HYPOTHEQUE, TAUX HYPOTHECAIRE
