The results are in, and the number of brokers who charge cancellation fees – touted as the best protection against rate shoppers – may surprise you.
A healthy debate has ensued on MortgageBrokerNews.ca about the use of cancellation fees, with brokers in both camps providing compelling arguments. But a new MortgageBrokerNews.ca survey is quantifying just how widespread is its use.
According to a recent MortgageBrokerNews.ca poll, 77% of brokers refuse to charge cancellation fees.
Of those polled, 12% admitted to using them as a rule, while 11% do in certain cases.
The small percentage of brokers using the tool, touted as the best way to prevent rate shoppers from jumping ship once they have a commitment letter to present to a bank may surprise its advocates.
“My penalty fee is 1%. But before I put it in the contract, I make sure all things are covered and one important thing is the lender's penalty,” Walid Hammami, a Quebec-based broker with Dominion Lending Centres
, wrote on MortgageBrokerNews.ca. “That penalty clause saves me a lot of time; I use it to filter out clients.”
The vast majority of broker subscribe to a different thought.
“I understand that the business has changed dramatically and rate shoppers will waste your time. However, these cancellation clauses are not right,” Jim Tourloukis
, a broker with Verico
Advent Mortgage, wrote on MortgageBrokerNews.ca. “If someone wants to go elsewhere then tough luck to you, mortgage agent.”
Still, most industry players are free to decide whether or not to implement a cancellation fee policy. But at least one major superbroker does not allow its brokers to charge them.
“None of our brokers do it, so it’s really not an issue for us,” Cameron Strong, CEO of Invis Mortgage Intelligence
, told MortgageBrokerNews.ca. “We don’t believe in that – if you don’t get the deal done, you don’t get the deal done and you move on to the next. There is so much business that brokers just keep moving; they’re so busy.”