As you may have heard, the Bank of Montreal set records and caught media attention when they dropped their 5 year fixed rate to 2.99% for a 2 week promotion. Although this is encouraging news for the potential mortgage client, it is necessary to proceed with caution. There are several other lenders who had this rate several month’s ago, but BMO is the first major bank to drop it so low and promote it very publicly.
Although this mortgage could potentially be the perfect fit; as a consumer, it’s worth examining all possible alternatives, if only because the Low-Rate mortgage has strings attached. For example, you cannot*:
• Repay the mortgage in full before maturity unless the property is sold to an unrelated purchaser at fair market value (fees will still apply)
• Refinance with, or switch your mortgage to, another lender before maturity
o Although, you can renew early, refinance to another BMO mortgage, or transfer your mortgage to a new property.
• Get an amortization over 25 years
• Get BMO’s normal prepayment privileges
oPrepayments are limited to 10% lump-sum and a 10% annual payment increase (BMO’s normal prepayment options are 20%/20%)
• Have a Low-Rate mortgage under a BMO ReadiLine line of credit
• Get a Low-Rate mortgage on a non-owner-occupied rental property
The up front savings could potentially cost thousands over the long term if you are placed into the wrong mortgage product. It is important to review your short and long term goals with a qualified mortgage professional before committing to any closed term products.
*Source: www.bmo.com, www.canadianmortgagetrends.com
www.christinebuemann.com
Although this mortgage could potentially be the perfect fit; as a consumer, it’s worth examining all possible alternatives, if only because the Low-Rate mortgage has strings attached. For example, you cannot*:
• Repay the mortgage in full before maturity unless the property is sold to an unrelated purchaser at fair market value (fees will still apply)
• Refinance with, or switch your mortgage to, another lender before maturity
o Although, you can renew early, refinance to another BMO mortgage, or transfer your mortgage to a new property.
• Get an amortization over 25 years
• Get BMO’s normal prepayment privileges
oPrepayments are limited to 10% lump-sum and a 10% annual payment increase (BMO’s normal prepayment options are 20%/20%)
• Have a Low-Rate mortgage under a BMO ReadiLine line of credit
• Get a Low-Rate mortgage on a non-owner-occupied rental property
The up front savings could potentially cost thousands over the long term if you are placed into the wrong mortgage product. It is important to review your short and long term goals with a qualified mortgage professional before committing to any closed term products.
*Source: www.bmo.com, www.canadianmortgagetrends.com
www.christinebuemann.com
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