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Canada is similar - usually you can prepay up to 15%/year, but any more than that and you need to pay a penalty (which seems to be calculated based on the inter
by infinite8s 4y ago
Canada is similar - usually you can prepay up to 15%/year, but any more than that and you need to pay a penalty (which seems to be calculated based on the interest they would lose). Also the yearly prepay amount is use it or lose it.
- jholman 4y ago20% lose-it-or-lose-it yearly is my experience in Canada, and I believe that's on top of being allowed to make double payments. And yes, the prepay penalty is generally based on the interest they would lose or a few month's interest, whichever is better for the bank at the time of payment. But also note that if you paid the extra for a 10-year, Canadian federal law says you can prepay 100% at any time after 5 years with no penalty (or virtually no penalty?). Which is part of why longer-term mortgages are markedly more expensive.
- infinite8s 4y agoAnother interesting aspect of Canadian mortgages (as opposed to US ones) is that you can't just walk away if the mortgage is underwater (which is what a pot of people in the US did after the GFC). The bank can come after you for the difference between house value and mortgage.
- lotsofpulp 4y agoThat is only in states that legislate non recourse home mortgages. https://www.loan.com/home-loans/how-non-recourse-loan-laws-vary-from-state-to-state.html https://www.loan.com/home-loans/how-non-recourse-loan-laws-v...