BMO has piqued the interest of mortgage consumers and the mortgage industry in general this morning by announcing a 2 week special rate of 2.99% on a 5 year fixed mortgage. Like any mortgage product offered by any lender, this offering will meet the needs of certain clients but certainly not all. What you need to know about BMO’s 2.99% 5 year fixed rate offer...
· Offer expires Jan 25th, 2012
· Maximum Amortization: 25 years
· Rate Hold: Up to 90 days (most lenders including BMO usually offer 120-180 rate holds)
· Lump-sum Pre-payments: 10% maximum per year (1/2 of the 20% that BMO normally offers and ½ of what many other lenders are currently offering on other 5 year fixed rate products)
· Limited Payment increase: 10% maximum per year (1/2 of the 20% that BMO normally allows and far below the option to increase up to 100% offered by other lenders)
· Term: Fully closed unless you sell the property to an unrelated purchaser at fair market value
· You can only refinance with BMO – This could force you to accept whatever rate they offer you at the time
· Early renewals can only be done into another BMO mortgage - again forcing you to accept whatever BMO offers you at the time. Pre-Payment penalties will still apply so you could be stuck paying an IRD penalty.
· BMO Mortgage Cash Account, Skip-a-Payment, ReadiLine (Homeowners Line of Credit) are not available with the BMO Low-Rate Mortgage.
· The 5 year, 2.99% fixed rate product is only available for owner occupied properties, disqualifying now-owner occupied rental properties.
I started this blog by stating that this mortgage product will meet the needs of certain client’s but not many others. If you are someone that can live with the restrictions and conditions listed above then you may want to hustle to see if you qualify. I would however warn potential clients that the short 2 week trial period of this offer should serve as a red flag in terms of the potential of being up-sold. Let’s face it, this offer is meant to make the phones ring at BMO. Once clients have started the application process, I would dare to say that those who may not qualify for this particular product based on credit history, employment income, affordability etc may just be offered somewhat different (higher rates) or terms.
Stay Informed...
“Helping you find a mortgage...and peace of mind”
Domenic Mirabelli
Mortgage Intelligence
416.303.4480
Domenic.mirbelli@migroup.ca
Great information! Staying true to your slogan.
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