Shhhh! – here’s how to get money back from your bank when paying off your mortgage:
When you sell your home or refinance, a bank will send a payout statement to the lawyer handling your matter that sets out the total amount owing to be paid to remove the mortgage off title to your home. Of course, a buyer or new lender will require you to remove the mortgage registration off title. Almost all lenders add interest, pre-payment penalties, fees and disbursements to the principle amount owing on your mortgage.
One line item on your payout statement will be an “administrative fee” – usually $250 to $350. First tier lenders, like BMO, RBC TD Canada Trust, Scotiabank, CIBC will refund this amount to you. Here’s how. “After” the refinancing or payout occurs, you go into your local branch and speak to someone in authority that you know, like the bank manager. If you have a good rapport and good history with your bank, then they may very well refund the funds back into your account. Don’t try this “before” the payout occurs because the bank wants to make sure that you have paid all that they have demanded first before refunding any amount to you. The administrative fee is included by “head office” of the bank because they are required to do so. They don’t know you. Only your local branch knows you and they have the discretion to refund the amount to you.
This can also, in some limited cases work for any pre-payment penalty charged to you. In some instances, and this is typically when your relationship with the bank is substantial, the local branch may refund some or waive your entire pre-payment penalty. Of course, if you are financing with your bank, speak to them up front about waiving or refunding the pre-payment penalty. Again, head office will include the pre-payment penalty and after refinancing, your local branch will then honour their commitment to refund the amount to you.
In my experience, second tier lenders, like MCAP, Streetcapital, FCT, will not consider such requests.