the 2.99% BMO deal is not that great
My colleague in Toronto wrote this and he puts it very well:
Don’t let the Banks Play you for a Fool.
With all the press surrounding the 2.99% % year fixed rate mortgage from BMO we thought we should clarify some if its characteristics. There is no point in saving 0.05% on a mortgage if it means having to pay outrageous break fees, or be limited to dealing with one Lender for the entire term of your mortgage. Believe it or not, many Lenders offer the same 2.99% without the draconian terms the Bank insist upon you.
Even though the Government of Canada is trying to put the brakes on the red hot housing market there are lots of great mortgages to be had in the market. It seems every major Lender in Canada will be offering a really low 4 Year or 5 Year Fixed Rate Mortgage by the time spring really has sprung. But you should be careful.
One such incredible rate that many people are asking about is BMO’s 2.99% 5 Year Fixed Rate Mortgage. We did a few interviews last week with different news outlets and made some comments on this offering and few others.
We have been doing our best to explain the perils of some of these new low rate products, as most are extremely restrictive. For example the BMO mortgage doesn’t let you break the mortgage unless you are selling your house. Consumers quickly find that additional value added features are typically removed from these products. These include your ability to pre-pay, to port your mortgage, to have someone assume your mortgage, or add or remove someone from the title.
Since most Canadians augment their mortgage in some way at about the 3rd year of their mortgage, we should be really careful about what type of product we choose. For instance, right now when it makes sense for many people to be breaking their mortgage to save money with the lower rate fixed and variable rate offerings many clients are locked in with no ability to change their rate or Mortgage Lender.
In short, be careful when picking a mortgage! Weigh all your available options before making a decision. Make sure that you are not sacrificing tens of thousands of dollars in penalties in the future for a small rate benefit today. Ask an expert, typically Bank Branch Representatives are not Licensed Mortgage Agents, and can only offer you one set of products.
Ask about our special “Mortgage Breaker Program” going on right now. If your mortgage is locked in for the next 2 or 3 years at 3.5% or more you could be saving thousands of dollars by breaking.
With all the people you have to worry about playing tricks on you today at least your mortgage will be safe.