Transparency on Banks Mortgage penalty terms
After several class-action suits and numerous consumer complaints, the federal government has gone some way towards protecting consumers wishing to pay down their mortgage.
Federally regulated financial institutions (Lenders) are now required to clarify their prepayment and penalty terms when a partial or total pay down is requested and must continue to do so on an annual basis.
Hopefully this transparency will force lenders to offer more reasonable pay out terms over time as they compete with each other. A step in the right direction, however in my opinion the Federal Government needs to go further and standardize how the Interest Rate Differential (IRD) is calculated for consumers. This is where certain lenders are gouging the consumer with outrageous penalties.
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