# Mortgage broker claims - need appraisal before getting rate freeze



## dcaron (Jul 23, 2009)

Im planning to break my 7y fixed term rate of 5.22% with my current lender (National Bank) on March 8, 2013. This is when I will reach the 5 year mark, and pay a 3 months interest penalty (~$3500). So in March 2013, I will ask NBC and CIBC ( my employer) to make me an offer.

I have also asked a mortgage broker (Dominion Lending Centre) to start looking into 120-day rate holds for me. He claims I must let his lender of choice execute an appraisal before getting a rate freeze. What Im worried about is winding up with the bill for the appraisal, if I choose not to go with DLC.

Is getting an appraisal before getting rate freeze standard practise? Should I look for another broker?

Thanks.


----------



## Cal (Jun 17, 2009)

I would just clarify that if you were to choose to take your business elsewhere that you would not be liable for any expense related to an appraisal.


----------



## sprocket1200 (Aug 21, 2009)

cibc always pay for my appraisals when I renegotiate. just get the new guys to do it.

how could 3 month interest possibly add up to $3500?? ours would only be $1200!


----------



## Maybe Later (Feb 19, 2011)

sprocket1200 said:


> how could 3 month interest possibly add up to $3500?? ours would only be $1200!


Is that a rhetorical question, a boast, a value judgement? The answer is easily calculable from the interest rate posted, which I won't since the OP chose not to disclose the balance in their post.


----------



## marina628 (Dec 14, 2010)

Usually they will only ask to do appraisal when you sign for the application.Do you live in an area where your home may not be worth as much as it was 5 years ago?Generally if there is no issue of equity they wont bother with appraisals.Chances are if you switched the mortgage the bank you go with will cover the legal and appraisal fees.Not sure what they will do to save you on the penalty.Your existing bank may be willing to do a blend and extend rate which will save you some interest plus penalty ,generally they can do them for 3 years+ so in your case will only increase the term by 8 months.


----------



## dcaron (Jul 23, 2009)

sprocket1200 said:


> cibc always pay for my appraisals when I renegotiate. just get the new guys to do it.


I learned that is something commonly done by any new lender, once you sign up with them.



sprocket1200 said:


> how could 3 month interest possibly add up to $3500?? ours would only be $1200!


Do the math with a 5.22% rate and an original mortgage of 321k in Feb 2008. Balance will be 261K in March 2013.


----------



## dcaron (Jul 23, 2009)

marina628 said:


> Usually they will only ask to do appraisal when you sign for the application.Do you live in an area where your home may not be worth as much as it was 5 years ago?


No. House value has risen by about 5% in 5 years.



marina628 said:


> Generally if there is no issue of equity they wont bother with appraisals. Chances are if you switched the mortgage the bank you go with will cover the legal and appraisal fees.


Yes. This is what Ive been pomised by my broker. I wish they would also pick up some of the penalty fees. Reason being is that broker may only be able to save me a few hundred dollars on the mortgage over five years - not really worth the trouble of switching lenders.



marina628 said:


> Not sure what they will do to save you on the penalty.Your existing bank may be willing to do a blend and extend rate which will save you some interest plus penalty ,generally they can do them for 3 years+ so in your case will only increase the term by 8 months.


That is exactly what my current lender (National Bank) promises to do if I break the 7y term, and renew with them for 3y or 4y term. They offered to erase the penalty, and offer a rate of 3.34%. DLC has offered a rate 2.89% for 5 years, and will pay for appraisal and legal fees. Even with this incredible offer, I would only save a few hundred dollars over the term, as mentioned previously. I did the math ...


----------



## dcaron (Jul 23, 2009)

Renegotiated my existing mortage (~$261K) and took 5 years fixed term at 2.79% at National Bank today. 
Paid the 3 months interest penalty (~$5k) to break my 7 year fixed term at 5.22%.
It was well worth it since I will come out even in 11 months (mortgage balance with old and new term will be the same). 
I am keeping the bi-weekly payments the same as before, and will be mortgage free in 14 years or less.


----------



## My Own Advisor (Sep 24, 2012)

2.79% over 5 years is great, well done.


----------

