Saturday, February 14th, 2009...2:39 pm
Banks Use Penalties To Tie Down Current Mortgage Holders
In today’s society, switching services can mean costing you more money. Everywhere companies have taken this business model and turned it into a reputable way to do business.
Companies are protecting themselves by selling you a cheaper upfront service, for your long-term business. In practicality this sort of commitment is a fair practice. But at what point to you does it overstep the lines of fair business? After all, free market capitalism is what we have long built our economy on.
Bankers everywhere are using contracts to keep you held down from searching for the most competitive price. They use penalties or a break funding penalty to keep people from breaking off their current agreement or mortgage. This can mean a very large sum of money by you the borrower.
Some banks are different but the typical bank wants three to six months of interest on a one to two year fixed rate loan. This means that a thirty year loan will be costing you additional interest payments just to break your agreement.
That is a lot of cash!
At what point does this simple practice teeter the unfair business practices?
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