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Financing, Mortgages and Insurance What options are best for you and your situation?


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Old 2009-04-12, 03:08 PM
EBLAIR EBLAIR is offline
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Join Date: Jan 2009
Location: Mississauga
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Default what is a mortgage discharge fee?

I received an email from someone who found my website on the internet, asking me why they were charged a discharge fee, by their bank, when they paid off the full balance of their mortgage. This was a fee that they were surprised to see and they were checking with me to see if that was a valid charge that they had to pay.

I explained to this person that this was most definitely a valid fee and that they should go back to their original mortgage contract/mortgage commitment to read the fine print, listed somewhere in their document. If you refer to the fine-print of your mortgage agreement/commitment, you will see it there listed under a “fees” section and it will list all standard fees borrowers will pay in certain situations, for example, service fees, assignment/transfer fee, processing fee, default charges/missed payment fee, as well as the discharge fee, as well as other possible fees related to the mortgage.

Here are a few situations where you would be required to pay a discharge fee:

1) if you pay off your entire mortgage balance;
2) if you switch from your current bank, to another bank, and register a new mortgage with the new bank.
3) if you sell your home and switch from your current bank to another bank.

The discharge fee is worked out, by your bank, on a simple one page form and it really does seem to be a very excessive fee to pay, for a simple form that may have taken your bank a short time to prepare. Interestingly, the mortgage discharge fee varies from province to province and from lender to lender. Did you know, for example, that in the province of British Columbia, The Financial Institutions Commission (FICOM) which regulates the financial services industry, has stated that a mortgage discharge fee must not exceed $75. You can read about their position at this following link:
http://www.fic.gov.bc.ca/pdf/mortgag.../mb-07-003.pdf

Unfortunately, the Financial Services Commission of Ontario (FSCO) has not created a similar cap on the bank’s mortgage discharge fee in Ontario. While every bank must disclose the discharge fee, in the mortgage contract provided to you, you can also go on-line to see what current published discharge fees are, at any time. Remember, however, that the discharge fee that you see in the mortgage contract you signed, is the fee that you will be charged once there is a need to have a mortgage discharge statement prepared. Bank’s published discharge fees can be viewed at this following link:
http://www.fiscalagents.com/thestar/mtg_disx_sort.shtml

This post was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: www.missmortgage.ca
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