The cost of a mortgage is more than just a rate

The Bank of Canada’s Finance Minister Jim Flaherty was known for criticizing BMO’s 2.99% mortgage promotion. He even went as far as encouraging other banks not to follow suit. Now that he has stepped down, they have come out with their Spring special yet again. Although rates are always an important factor in a mortgage, it is important to look at all of the aspects and/or restrictions in a mortgage.

This particular special has caught a lot of flack because of their restrictions but there are several other lenders and products on the market to be aware of as well. Here are a few of the restrictions on this particular BMO Special:

·         Pre-payment options are reduced to 10/10%

·         Amortization is capped at 25 years (most you can still go to 30 or 35 years with 20% down)

·         Full repayment before maturity can only occur if property is sold to an unrelated purchaser at fair market value or if the mortgage is renewed or refinanced into another BMO mortgage product

·         No cash account or skip-a-payment allowed

·         Potential $300 appraisal fee (they also will not provide you with a copy and you cannot use a current appraisal)

When getting into a mortgage, one of the first things to consider is how easily you can get out of it. Life happens and in the event that you need you modify or get out of your mortgage, you always want to go with the easiest and cheapest route without sacrificing too much on the rate up front. Some options you want to look for are:

·         The ability to bring the mortgage with you to a new home purchase

·         The ability to pay out the mortgage and refinance with whoever is best for you at the time

·         The ability to have someone else assume the mortgage

·         The ability to have your co-signer removed without having to refinance

·         The ability to pre-pay as much as possible

·         The ability to change your payment frequencies as you choose

·         The ability to “blend and extend” your mortgage

 

For questions on these options or for any mortgage questions, please feel free to contact me.

http://www.christinebuemann.com