# Mortgage payment going up but interest rate going down?? Whats up?



## thebomb (Feb 3, 2012)

hey all, 

so we are shopping around as our mortgage comes up in 3 months. We are with ING and had an appt with TD. I provided them an up to date statement so that as part of our meeting we could see what our new payments would be. 

ING 3.99 (current)
TD 2.97 (offered rate)

We are doing accelerated biwkly. TD quoted us the same. In the end (for whatever reason ) our bi-wkly payments went up 30$. Whats up with that?? They went through all the details numerous times and could not explain to us how a 1.03% drop in our interest rate resulted in a HIGHER payment. So I called ING as I am aware that we had some payments adjusted but each was related to property tax payment adjustments. They could not provide any useful info either. 

I am racking my brain trying to think of what could be causing this and am hitting a wall, alas and so I reach out to all of you. Any thoughts??????


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## Mortgage u/w (Feb 6, 2014)

I will assume you went over the obvious parameters such as amortization, rate, qualifying rate, accelerated vs non accelerated payments and of course the loan amount.

Next, you seem to mention the bank is managing your property taxes as well. Have you isolated the mortgage payment and the tax portion and compared with previous? Tax payments can be complex in the manner they are calculated. Depending on when the loan is opened, the tax payment can be higher depending on when they remit to the city...they need to acculumate enough cash to pay it. Its not a simple calculation as 'annual tax amount divided by your payment frequency'. 

Lastly, see if TD added an insurance premium - depending the property location or your personal profile, the bank may have chosen to insure your file.

Other than what has been mentioned, there is no reason the payments are higher. It can't be a mystery - its basic math so there is a change somewhere. If your banker can't find it, change banker!


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## Addy (Mar 12, 2010)

Mortgage u/w said:


> Lastly, see if TD added an insurance premium - depending the property location or your personal profile, the bank may have chosen to insure your file.


Yes, do check, we have had TD staff in the past add insurance to various mortgage and loan applications without our consent. One time the staff member asked us three times if we wanted loan insurance, we said "NO" in no uncertain terms and she still added it to the application. Clearly staff there get a commission or payment of some sort for selling insurance.


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## MRT (Apr 8, 2013)

yes...insurance is a HUGE money-maker for the lenders, and they pay out commission to brokers and their own specialists to sell it. While there are some limited examples of it being a solid option for some borrowers, the vast majority will more greatly benefit from a term policy through a 3rd party. 

mortgage u/w covered it - it is straight math. given a mortgage amount, interest rate and compounding period, and amortization period, your payment is determined. 

One possibility where payments can get thrown off: let's say you have a 25yr am, but you accelerated your payment and reduced it to 21.5...if you then shop elsewhere, they may see on a mortgage statement that you have a 21.5 yrs am. and then they accelerate your payment from there (rather than 25) by mistake, reducing the am. even further to 18 or something...the payment will naturally be higher. Just make sure everything matches your existing mortgage to gain a proper comparison.


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## thebomb (Feb 3, 2012)

MRT I think you might have nailed it! I am going to call the bank and see. Will post the answer.


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