Personal Finance

Mortgage fees - can they do this?!

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  • Jan 23rd, 2015 12:17 am
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Deal Addict
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Sep 15, 2014
2798 posts
1641 upvotes
Scarborough, ON

Mortgage fees - can they do this?!

There was a message along with my "annual mortgage statement" that I got in the mail today:
"Effective April 1, 2015, the discharge fee on your CIBC moorage will increase from $260 to $300. This fee applies when the registered mortgage charge is discharged from the title to your property."

???

Can they do this? Or does it only take effect if I choose to renew my mortgage with them when my term is up later in the year (spoiler: I won't be ;p)?
11 replies
Deal Addict
Mar 18, 2009
1458 posts
286 upvotes
Renous
They just did
Reserved for future time travellers
Sr. Member
Apr 28, 2014
675 posts
185 upvotes
Oakville, ON
Sorry OP, I wish it were a cruel April Fool's joke. As an aside, April 1 is always the day that CIBC makes service charge adjustments.

If you can discharge the mortgage before April 1, you will save $40. If not, well, hopefully you opted for a variable rate mortgage and you will save that $40 on interest charges if and when CIBC lowers its Prime Rate.
Deal Expert
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Aug 18, 2005
21223 posts
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Burlington-Hamilton
Yeah I had something similar from RBC.
Sr. Member
Apr 28, 2014
675 posts
185 upvotes
Oakville, ON
If the banks are making less in interest margins on mortgages, they will just make up the difference with fees
Deal Expert
Aug 22, 2011
41800 posts
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Center of Universe
Yes they can, similar to that when they increase banking fees and other services.
Deal Addict
Jul 8, 2009
1024 posts
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Toronto
How exactly is this allowable? A mortgage agreement is a contract. One party can't just unilaterally change the terms of a contract.

If the bank can do it, why exactly can't OP tell the bank that from now on he'll be deducting a $10 "service charge" every month he pays his mortgage?
Deal Addict
Oct 14, 2004
1474 posts
438 upvotes
Toronto
Mercury048 wrote: How exactly is this allowable? A mortgage agreement is a contract. One party can't just unilaterally change the terms of a contract.

If the bank can do it, why exactly can't OP tell the bank that from now on he'll be deducting a $10 "service charge" every month he pays his mortgage?
No doubt there is a section that you sign saying "Fees can change at any time"
Deal Addict
Apr 15, 2004
1603 posts
149 upvotes
Toronto
in the agreement it probably says ... with proper notice the bank is allowed to change the terms of ...

this was his notice
Jr. Member
Aug 23, 2008
171 posts
48 upvotes
Richmond Hill
James_TheVirus wrote: No doubt there is a section that you sign saying "Fees can change at any time"
So is there anything stopping them from increasing it to say, $5000?
Deal Addict
User avatar
Sep 15, 2014
2798 posts
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Scarborough, ON


I feel like I'm being f-ed over here.
Either I:
a) Pay off the whole mortgage before April 1 (I could do this if I wanted to). And likely pay significant penalties.
or
b) Pay this ridiculous charge that I don't believe I ever agreed to (I'm not a lawyer. I don't understand the fine print. But this was never explained to me by anyone that they could do this).

Needless to say, if they f-k me over with this.. I won't ever do any banking with them again.
Sr. Member
Apr 28, 2014
675 posts
185 upvotes
Oakville, ON
TheImp wrote:

I feel like I'm being f-ed over here.
Either I:
a) Pay off the whole mortgage before April 1 (I could do this if I wanted to). And likely pay significant penalties.
or
b) Pay this ridiculous charge that I don't believe I ever agreed to (I'm not a lawyer. I don't understand the fine print. But this was never explained to me by anyone that they could do this).

Needless to say, if they f-k me over with this.. I won't ever do any banking with them again.
I feel your pain. Back in 2008, all the major banks adjusted the base rates on their unsecured PLOCs and added 100 basis points.

Eg. An unsecured PLOC at Prime (this was possible in 2008) was now Prime + 1.00

An unsecured PLOC at Prime + 1.00 was now Prime + 2.00

The banks said, "Well, we obtain a lot of our funding for these from the market, and the cost of our funding has gone up, so we must pass this along to our customers in the interest of maintaining profitability for our shareholders."

And people said "I signed a contract! They can't do this!!" Well, the contract says they can do pretty much whatever they want.

This is how BMO prices a Line of Credit per what it says in the contract.

The Line of Credit pricing is a Base Rate + or - a Variance.

Base Rate = BMO Prime + Percentage Rate

Base Rate = 3.00 BMO Prime + 3.00 Percentage Rate

Base Rate = 6.00

A PLOC that is priced at 4.25 is expressed as: Base Rate - 1.75

In the contract, BMO says they can change the Percentage Rate at any time with notice. In other words, BMO can charge whatever they feel like on a PLOC.

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