Penalty protection paying dividends for brokerage

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One successful brokerage has found a way to attract new clients without cutting into commissions, but by help clients eliminate risk.
Brian and Karen Matthey, the father and daughter team of Verico The Mortgage Professional, based out of Eastern Ontario, have found a great add-on package for their clients.
“For the client, they are effectively getting free money,” says Karen Matthey. “We only just started using it as an add-on a month ago here in the Kingston market; it’s been a great addition and great for business.”
The PaylessPenalty option is popular in Kingston, says Karen, because the average mortgage costs are much lower than compared to, say, Toronto or Vancouver.
“We’re dealing with only a few thousand dollars here,” she says, “so this service makes a lot of sense. If we’re talking tens of thousands of dollars, then I doubt the client would do it, and instead just wait out the extra year or two to fulfill their mortgage obligation.”
The Mortgage Professionals processes over $300 million in mortgage volume annually throughout Eastern Ontario – having grown from a staff of only three people in 1989 to some 36 brokers and agents in five offices. 
The PaylessPenalty concept basically works like this:
If a client was facing a $20,000 penalty because he or she had three years remaining on a five-year-fixed term mortgage, would loan the client the maximum pre-payment amount, thereby reducing the principal owing and the total penalty. If the penalty was reduced to $18,000, the client would receive $1,000 and would receive $1,000 (plus whatever prepayment was loaned by to the client initially).
“So long as there is a mortgage that has an unused portion of the pre-payment option available, it doesn’t matter if the mortgage payout is part of a property sale or refinance,” Bruce Schoenne of PaylessPenalty told “It also doesn’t matter if the mortgage is a first, second or third mortgage.” will also get a registerable mortgage as a guarantee, in case the deal goes south.
But for the Mattheys, the proof in the pudding has been the increase in clients.
“We’ve been attracting clients with this offer,” she says. “We’ve been offering it to Realtors and lawyers, and have been attaching the PaylessPenalty video at the bottom of our email signatures. It is definitely producing results.”

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