Posted on: 13-11-08 15:41:13
Hi
My Last statement .. the variable rate went down due the BoC rate changes..
But instead of passing all the benifit to me , the bank increased my Principal by about 50% of the difference..
Do i have a right to ask them not increase my pricipal component..
Thanks
Dude
Quote:
Originally posted by dudewheresmycar
Hi
My Last statement .. the variable rate went down due the BoC rate changes..
But instead of passing all the benefit to me , the bank increased my Principal by about 50% of the difference..
Do i have a right to ask them not increase my principal component..
Thanks
Dude
By increasing the principal component from your mortgage payments, the bank is passing the benefit to you by reducing your principal thus increasing your equity in your house and saving you in interest costs. Enjoy this forced savings till the rates are low.
As far as reducing (or increasing) the mortgage payments with change in prime rate are concerned, it depends on the variable product of the bank you chose for your mortgage. Some banks would change the mortgage payments (up or down as per prime movement) while some would keep it fixed by changing the interest and principal component.
Please see your mortgage documents and you would know what type of agreement you have with your bank.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
