May 15, 2014
Brian Hyytiainen bought a house and took out a five-year mortgage in 2011. Things have changed in his life, forcing him to put the house up for sale.
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“I’m unable to continue to afford the house on my own,” he says. “I’d heard there would be a prepayment fee, but I had no idea the bank would take advantage of an already difficult situation and charge $13,000.”
He was dealing with RBC, Canada’s largest bank, which charged him an interest rate of 3.79%. That was what he saw on the first page of his mortgage agreement. Only on the third page – in fine print – did he find out that he had received a rate discount of 1.55%.
Most of the Big Five banks start with a high posted rate and offer discounts to customers who ask for one. It’s a game that has gone on for many years. But the high posted rate can come back to haunt customers who decide to break a closed mortgage at a time when rates are falling