[partisan]

I wonder if bank staff are in on it sometimes. I once was at a bank branch and had the teller pick up the phone, call another teller and tell her my balance in a foreign language that I happen to speak fluently (but don’t look like I should).

I wanted to ask her why she would be doing that, but I was a bit more meek in my younger days.

[kevin_nisbet]

I had something not exactly like this occur to me. It wasn't something I overheard, but I'm pretty sure it went something like this:

1. You talk to a teller at a branch, and they bring up your account details. The teller see's you have a mortgage with the bank, but registered to a different branch. 2. They have some sort of incentive from the mortgage specialists at their own branch or management, to refer those accounts to their own mortgage team. 3. The mortgage department at the new branch calls me, and says I can do an early renewal at a lower rate, if I come in and see them.

Anyways, I did the early renewal at my original branch, as I had a connection to a manager at that location. Either way, I ended up shaving a good chunk of interest by renewing a year early.

[0xffff2]

What's an "early renewal" in this context? Mortgages aren't things I think of as requiring renewal at all.

[kevin_nisbet]

Ah sorry, maybe it's a Canadian thing. I have a mortgage with an amortization that's say 20 years. But I actually enter into an agreement and a rate for say 3 years. At 3 years myself and the bank need to enter into a new agreement, or I can shop around for the best rate for the next term with other providers (although some banks have been clever in the rules trying to prevent this).

An early renewal would be doing a renewal with the same bank at say the 2 year mark for a new term and interest rate. The bank allows the old contract to expire early, since they're getting the new one for an extended period, like another 3 years. These terms can vary, with 5 years being the most common, but can be shorter or longer and apply to both variable and fixed rate mortgages.

Note: I'm not an expect on this or how it compares to other regions.

[0xffff2]

Ah, that's interesting and subtly different from the way it works in the US. The most common mortgage loan here is simply a 30-year fixed rate loan. We do have 3 and 5 year fixed loans, but they just revert to a floating rate after the fixed term so there's no presumption that you have to get a new loan at the end of the fixed term even though it's often a good idea. Those loans have also fallen out of favor substantially since 2008. Are full-term fixed loans not a thing in Canada?

[toast0]

My understanding is that this style of loan, balloon payment mortgage, used to be common in the US too, but government intervention in the form of Fannie Mae loan purchases made the 30-year fixed loan widely available.

As a borrower, there's a big risk with a balloon payment that you may not be able to find financing when it's due, so having a full term loan is very desirable.

[UnFleshedOne]

Nope, 5 years is a maximum term you can get for residential mortgages, fixed or variable, with 25 years amortization most commonly (so you'll renew it at least 4 times).

Maybe there are other weird types of mortgages but they are usually not available for individuals I think.

[beerandt]

At least if you're at the bank, the typical separation of powers would at least ensure they're caught promptly, should something go wrong.