FirstLine Rates & IRD Penalties

If you’re a FirstLine fixed-rate mortgage customer, this info may be helpful.

 Now that FirstLine has stopped selling new mortgages effective July 31, there is a question of how it will set its rates going forward.

This may not matter to most, but it is definitely relevant to those planning to refinance or switch their FirstLine mortgage early.

 The reason it matters is because FirstLine’s future rates will impact its interest rate differential (IRD) charges. As most of you know, IRD “penalties” sometimes apply to people who terminate a fixed-rate mortgage before maturity. (The penalty is usually the greater of three month’s interest or IRD.)

 CIBC says that, going forward, the “posted (a.k.a. “ceiling”) rates for FirstLine Mortgages will be (set) in line with the approach we had taken over the last year when we were actively accepting new applications.”

 If so, that’s something positive because FirstLine’s rates have been above-market for at least a year. The higher the comparison rate, the lower one’s IRD charge.

 A spokesperson from the bank adds, “…Our stated goal is to retain FirstLine Mortgages clients in our CIBC brand as part of a broader relationship with them.”

 In turn, we’d expect CIBC to make FirstLine’s penalties less severe for certain customers who refinance with CIBC. (Although, we don’t actually know if, or how frequently, that will be the case going forward.)

 Two other tips:

  • From now on, you’ll be able to check FirstLine’s rates at: http://www.firstline.com/PDFs/printrat.pdf.
  • If you need to estimate your penalty, FirstLine will provide a quote if you call 1-800-970-0700. It will then likely be in your best interest to call your broker and compare refinance options from all lenders.

Rob McLister, CMT

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