Newly launched Prepayment Penalty Mentor can assist debtors capitalize on the golden alternative of falling charges. 

It additionally equips brokers with the insights they should assist their shoppers make smarter choices about breaking or paying off their fixed-rate mortgage early.

Shedding mild on hidden prepayment prices

The instrument makes use of deep historic information charges, lender contract and coverage monitoring, and ahead projection for almost all of lenders to offer an correct image of the prepayment charges of their mortgage contract. That enables them to match their present phrases towards out there options, whereas accounting for the penalties they’d incur for making the swap.  

“If I as a dealer need to perceive the penalty that my shopper has to incur with a view to doubtlessly get monetary savings, I usually need to ask the department to get that data, and I threat shedding the shopper,” says LenderKey CEO Christopher Darwiche, who was concerned within the improvement of the undertaking. “This can be a instrument that permits me to proceed including worth to my shopper with out exposing them to the specter of shedding them to the lender within the retail channel.”

Darwiche explains that lenders solely have a voluntary requirement to make simplified penalty data available on their web site — and lots of nonetheless require a telephone name — however there was beforehand no instrument that supplied prepayment penalty data throughout lenders.

“Bringing that transparency to brokers in order that they will now have higher conversations creates a extra democratic expertise for mortgage choices, so I don’t have this secret mortgage penalty I don’t find out about that, on the final minute, forces me to stick with my lender,” explains mortgage dealer and Vine Group founding companion Hugo Dos Reis.

The instrument got here collectively as a aspect undertaking amongst a gaggle of brokers and business professionals on the MPC Nationwide Convention in Vancouver in October 2022. There, dealer and now CEO of Prepayment Penalty Mentor, Matt Imhoff, hosted a breakout session on prepayment penalties.

“Neil Bartlett and Matt took the dialog even additional, resulting in a collaboration,” explains Darwiche.

Bartlett, a seasoned government with expertise as Senior Vice President at each RBC and Scotiabank, was intrigued by the problem and the chance to assist customers financially.

Bartlett can also be an completed creator of three books on software program improvement and a acknowledged chief in threat analytics throughout the monetary business. He performed a key government position at an organization acquired by IBM for USD $345 million, and later acquired the corporate’s highest distinction, being named an IBM Fellow in 2013.

“This has been over two years of Matt and ourselves working collectively to lastly get to the place we’re immediately and begin delivering a product that we’re fairly happy with,” Darwiche added.

Brokers who’ve examined the instrument are calling it a “game-changer.” Mortgage dealer Chris Kolinski ran a number of mortgages by it and located financial savings throughout the board.

“This instrument is a goldmine—particularly in the event you’ve obtained plenty of 3-year fastened offers from the previous couple of years,” he stated. “Everyone knows there’s cash sitting in our databases… that is a simple approach to discover it.”

A well-timed resolution

Prepayment Penalty Mentor occurs to be hitting the market at an opportune time. As fixed mortgage rates continue to fall, there might be vital benefits for these trying to swap, repay, or break a fixed-rate mortgage.

“Clients are actually pondering, ‘you already know that 5.2% that I locked right into a yr in the past? I can do higher now,’” explains Darwiche. “As a result of Matt and the crew are giving insights to our customers, now you can go into the instrument, run the maths, and name the shopper with a greater deal.”

Darwiche says one person lately helped a shopper save $6,800 and scale back their mortgage amortization by 39 months — for a complete financial savings of about $50,000 over the lifetime of their mortgage — by shopping for out their present mortgage and switching to a product with extra beneficial phrases.

“We simply went by the rollercoaster with charges going up then coming down, and on the downward development — moderately than getting caught or ready it out — we could be proactive, attain out to prospects, and provides them recommendation,” Darwiche provides. “There is no such thing as a position in any financial institution the place their job is to proactively name the shopper and say, ‘it is best to break your mortgage, pay the penalty, after which both keep right here or go to a competitor and get somewhat additional financial savings,’ however a dealer can do this.”  

Forecasting future penalties

Not solely can the instrument supply debtors information in regards to the prepayment penalties related to their present lender, however it could possibly additionally assist them evaluate phrases throughout suppliers, together with A and B lenders, credit score unions and monoline lenders.

“What we do, along with that, is we assist the dealer — and the top shopper — perceive what the penalty might be sooner or later,” Darwiche explains. “That’s one thing that nobody’s doing immediately; they’ll inform you what the penalty is immediately, and possibly subsequent week, however if you wish to know what the penalty is six months from now, it’s important to name again in 5 months and three weeks.”

With posted charges and penalty quotes altering regularly, brokers usually can’t supply recommendation on the place charges might go sooner or later. That data, nonetheless, might be very important for shoppers trying to change their housing scenario or plan round main life occasions.

“I used to be the second particular person to know that certainly one of my shoppers was planning on getting divorced. Why? As a result of they obtained a penalty quote immediately, and realized it might change in the summertime,” Darwiche says. “We mapped it out, we put collectively a plan for them to pay a penalty immediately that was lower than it needs to be after which sit in an open mortgage at simply over 6% till they in the end promote the marital residence.”

The Prepayment Penalty Mentor gives tiered pricing, with unique reductions for Mortgage Professionals Canada members (MPC members can simply entry the low cost by getting into the e-mail used to login to MPC):

• Penalty Calculator ($20/month, $10 for MPC members) – Supplies penalty calculations for 50+ lenders, interactive graphs, and penalty forecasting.
• Comparability Device ($50/month, $40 for MPC members) – Expands to 200+ lenders, providing refinance situations and debt consolidation insights.
• Full Bundle ($100/month, $90 for MPC members) – Consists of the prepayment penalty dashboard, superior analytics, coaching, and training.

Although the answer was over two years within the making, the creators behind it say this week’s launch marks a place to begin, not an finish.

“This isn’t one thing that we simply did some analysis and now we’re good to go,” says Darwiche. “That is one thing that we’re rising and evolving and persevering with to enhance.”

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Final modified: March 25, 2025