Rob Falls - The Mortgage Centre - Team Duggan

11/13/2023

03/06/2023

IRD, or interest rate differential, is a penalty that may be charged by a lender if a borrower repays a fixed-rate loan before the end of the term. The IRD penalty is meant to compensate the lender for the difference between the interest rate on the loan and the prevailing interest rate at the time the loan is repaid.

Institutional banks typically calculate the IRD penalty using a posted rate, which is the advertised interest rate that the bank offers for fixed-rate loans. The posted rate is often higher than the actual interest rate that the bank charges its customers, and it is used as a benchmark for calculating the IRD penalty.

The calculation of the IRD penalty varies depending on the lender and the terms of the loan, but it generally involves comparing the interest rate on the loan to the posted rate for a similar term. If the posted rate is higher than the interest rate on the loan, the IRD penalty may be calculated as the difference between the two rates multiplied by the outstanding balance of the loan and the remaining term.

For example, if a borrower has a $100,000 fixed-rate loan with an interest rate of 3% and a remaining term of 2 years, and the posted rate for a similar term is 4%, the IRD penalty may be calculated as follows:

IRD penalty = (4% - 3%) x $100,000 x 2 = $2,000

This means that the borrower would have to pay an additional $2,000 to the lender as a penalty for repaying the loan before the end of the term. However, it's important to note that the actual calculation may be more complex and may involve other factors such as the current market conditions and the lender's policies.

02/24/2023

Even though housing prices have decreased in many markets across Canada, housing costs remain elevated and affordability is “significantly worse today than what it was a year ago”, according to John Pasalis, president and broker at Realosophy.

02/02/2023

New Chapter, Same Story!

I'm excited to announce that I have switched mortgage brokerages and have moved over to "The Mortgage Center" part of "Team Duggan".

Same great products and same great pool of lenders.

As always I am here to answer and mortgage related questions you might have and look forward to helping you with your home a mortgage needs.

My new email is [email protected] or my direct line 905-299-4140. Text, call or email, I'm happy to help and never too busy for referrals :)