With all of the different mortgage rates out there, finding just the right one that suits all of your needs can be frustrating. Learn how to find one that’s best for you.
BMO Bank Of Montreal Mortgage Rates
BMO Bank of Montreal (BMO Financial Group) is the oldest bank in Canada and it officially began operating in 1817. Today, it is the nation’s fourth-largest bank when rating it by market capitalization. The bank has more than 900 branches across Canada serving more than 7 million customers.
BMO has a $106 + billion mortgage portfolio (as of Q2 2018) and sells its many of its mortgage products through mortgage specialists and various branches. The bank is not involved in the market of mortgage brokers. BMO is especially known for its headline-making rate specials (it was the first bank out of all the big banks to 2.99 percent on a 5-year fixed mortgage in 2012) and low-frills mortgage (the “Smart Fixed” mortgage). A lot of the time, its rates aren’t far away from the rest of the banks.
BMO Posted Rates
BMO provides three different types of mortgage rates that are similar to the other big banks: posted rates, featured rates, and discretionary rates. There aren’t many customers (at any bank) that pay the full posted rates since they are inflated rates that are mostly used as a reference level to calculate discounts and penalties that are associated with prepayment.
The featured prices of BMO are made from time to time and are discounted limited-time offers only. Such rates are significantly lower than the posted rates of BMO but typically higher than the overall market’s best rates.
However, discretionary rates are even better than the rates featured by the bank. These are regarded as the best mortgage rates for banks. Discretionary rates are known to only be available to well-qualified borrowers and typically require some negotiation to get them.
BMO provides the same selection of mortgage products that most other major banks and mortgage lenders offer. These include the most common fixed rates of 1 to 10 years, as well as variable rates of 3 years and 5 years. BMO also provides hybrid and cashback mortgages. They even offer an open 18-year mortgage (although the rate is so poor that almost no one gets it). BMO’s 5-year Smart Fixed mortgage (previously called the “Low Rate Mortgage”) is their brand mortgage product. This product offered the lowest 5-year fixed rate in comparison to all of the other big banks and caught the attention of the late Jim Flaherty, who was the Finance Minister at the time. This was at a time when the government was slow borrowing and BMO offered it as a 2.99% promotion.
Details on BMO’s low-frills rate:
- Has lower prepayment privileges (10% annually vs. BMO’s regular 20%)
- Ther is a 25-year amortization maximum (vs. 30 years for many of BMO’s other conventional products).
- It doesn’t include BMO’s “Cash Account”
- Doesn’t come equipped with the Skip-a-Payment feature
- Penalties are based on posted rates and this results in a greater prepayment charge in comparison to other lenders
Most of BMO’s mortgage rates provide an industry-leading 130-day hold and a flexible 20% lump sum and 20% payment increase prepayment feature. You can make multiple pre-payments in a given year, unlike some banks. In addition to a discharge/assignment fee ($75 in B.C., no fee in Alberta or Quebec, $200+ in other provinces) you will face a penalty if you prepay more than the permitted amount.
BMO borrowers also receive an annual skip-a-payment plan, as well as a family care option that allows you to bypass up to four monthly mortgage payments “if you or your partner have to leave your job to look after a new baby or a sick family member.” This isn’t available with the Smart Fixed Mortgage.
Similar to the majority of the big banks, BMO is up charging for 25-year amortizations. Currently, BMO’s surcharge is 10 basis points extra for going with a 30-year amortization. The mortgage clients of BMO will be able to choose from a variety of different payment options that include: monthly, accelerated weekly, or bi-weekly.
BMO’s Variable Rate Mortgages
The variable mortgage that is offered from banks can be converted to a fixed-rate at any point in time. However, keep in mind that when you convert, you never get much more than the advertised rates.
The variable mortgage rates that BMO offers include fixed payments. This basically means that you’re going to pay less principal and more interest if the prime rate goes up, and vice versa. The payment will typically always the same (unless rates rise so much that the interest due is not covered).
Factoid: BMO became the first big 6 banks to prominently advertise a variable prime rate-1.00% in 2018.
BMO Homeowner ReadiLine Line Of Credit
Through BMO’s Homeowner ReadiLine credit line, customers who want to access the equity in their home can do so. This re-advanceable HELOC provides homeowners with access to up to 80% of their home’s value. These funds can then be used for everything from home improvements/renovations, getting rid of high-interest debt, business financing and investment purposes.
Like the majority of the other banks, a HELOC requires the homeowner to have at least 20% equity in the home and only 65% of the home’s value can be in the form of a revolving credit line. Line of credit payments may only be as small as interest-only. You can also have the ability to utilize locked-in portions similar to standard mortgages.
Readvanceability is the best part of having a mortgage in a ReadiLine. This ensures that funds are available to reborrow from the line of credit portion when you pay off the mortgage portion This can be useful as a low-cost source of extra money for investment funds, a second down payment for land, etc.
BMO Cash Account
The cash account is by far the best mortgage feature from BMO The cash account gives you the ability to re-borrow your mortgage prepayments (in amounts of $2,500). The kicker is, you get to do this at the same rate as your regular mortgage. In other words, BMO says: “At the current interest rate for the duration of the term, the re-borrowed funds are credited to your mortgage principal.” BMO’s cash account provides a relatively low-cost source of funds. It takes a lot of the burden and risks away from making prepayments because you can reborrow in case an emergency comes up. There are currently no other major lenders in Canada that offer this feature.
How To Go About Getting A BMO Mortgage
BMO will only sell its own branded mortgages through its branches, call centres, and mobile mortgage specialists. In comparison to many of the other major banks, BMO doesn’t get involved with the mortgage broker channel. It left that in 2007. If you are switching an existing mortgage over to BMO, you need to keep in mind that the bank will in a lot of cases, pay your appraisal and registration fees. Ask someone at the bank for more clarification.
Using A BMO Mobile Mortgage Specialist
Most of the mortgages from BMO are marketed by mobile mortgage specialists from the bank who earn commissions from each mortgage product they sell. Mobile mortgage specialists will relinquish some of their commission to “buy down” the interest rate in a similar way that a mortgage broker can do. When negotiating your offer, this is important to keep in mind.
Things to keep in mind about mortgage specialists:
- Many mortgage specialists will only serve customers that are new to the bank and not existing customers that have mortgages that are up for renewal. To get a renewal, you need to contact the BMO call centre or visit the branch.
- Visit the BMO website for more information on scheduling a call with a mortgage specialist.
The pre-approval process for BMO mortgages is simple and they typically come with a standardized 130-day rate hold. Keep in mind that the bank is not well-known for offering its lowest discretionary rates for pre-approvals.
How To Go About Getting The Best BMO Mortgage Rate
Typical to almost all rates, it is possible to negotiate the mortgage rates with BMO. Buyers ensure that they should never consider the bank’s first offer. Be sure to compare the rate provided to you with offers with similar terms and benefits at other lenders in order to be in a stronger position to negotiate.
You need to understand that your business is desired by bank specialists and their employers and are generally willing to come down on the rate to secure it. When they refuse to budge, tell them that you are going to shop at other lenders.
Renewing a BMO Mortgage
Do not expect the best discretionary rates from the bank to adhere to you if your mortgage is up for renewal. Unfortunately, the greatest rates are usually reserved for new customers. But no bank customer should expect to pay posted rates during renewal.
You want the best possible rate when negotiating, but remember to keep your expectations realistic. Many people do not like the inconvenience of changing lenders, and the bank knows that. So it often quotes specific special rates (which are not so special) as the first and initial offer.
As mentioned above, do not be reluctant to seek out other lenders if the negotiations are not working at the bank. Because of these details, it’s suggested to start the mortgage renewal process around 90 to 120 days before the maturity date.
Pros Of BMO
There are benefits to getting a mortgage through BMO:
- Reputation: BMO has a strong reputation as one of Canada’s biggest banks because of its strict monitoring procedures in place to protect its client’s interests.
- Full-service: working with one of the Big 6 banks may have its disadvantages, but one advantage is that they are a one-stop access centre to additional banking products such as bank/savings accounts, investment accounts, or additional secured loans.
- Convenience: For those who enjoy face-to-face meetings, a BMO mortgage is perfect. Many BMO mortgage specialists will meet you to answer questions about your application at a place of your convenience. The bank also provides the convenience of having 24/7 online access to handle your mortgage from home.
- Rate Discretion: BMO is able to negotiate on a case-by-case basis despite not having the best market rates. Whether you do a large amount of banking with the company or have a large mortgage, that’s even more relevant. In several cases, we’ve also heard of clients on BMO’s full-featured mortgages receiving low-frills offers.
- BMO’s Cash Account: Perhaps Canada’s most revolutionary mortgage feature.
- Branch Access: With over 900 branches across Canada (as of January 2018), it’s easy to arrange an in-person meeting regardless of where you are.
Cons Of BMO
There are also some cons of getting a mortgage through BMO.
- Limited Advice: This is a critique against any of the big banks and it can also apply to BMO. Because BMO mortgage specialists offer only BMO mortgage products, there is little possibility that they will give a prospective client an objective comparison of (potentially better) products offered by the bank’s competition.
- Potentially higher rates: It is a well-known fact that many of the rates presented by the big 6 banks are usually not the most attractive on the market. Their “special” or “featured” rates aren’t even very attractive.
- Fixed penalties can be higher: early break-up of your BMO mortgage often causes an IRD (Interest Rate Differential) penalty that causes prepayment charges. The big banks’ IRD fines are notoriously high because they are dependent on the high posted rates of the bank. Many of BMO’s rivals base their prepaid payments on fairer rates which are more customer-friendly.
- Restrictive Home Protector Insurance: BMO’s life insurance is not portable to a new lender, much like the other Big 6 banks. If you need to turn to another lender that offers a better renewal rate, you may need to pay higher premiums to remain insured (because creditor life mortgage insurance is dependent on your age and health). Keep this in mind, particularly if you become ill after you take out your original policy.
BMO Mortgage Calculators
Together, BMO and the other big banks set the prime benchmark of the country Typically the prime rate adjusts when the overnight rate of the Bank of Canada is increased or decreased.
BMO’s prime is basically the same as other big banks, but technically, it doesn’t have to be. BMO gained unwelcome attention when it kept its prime lending rate 25 basis points lower than the comparable rate of the other big banks.
- BMO has over 900 branches
- The mortgage portfolio includes over $106 billion in residential loans as of the first quarter of 2018.
- BMO serves all of the provinces in Canada and has more than 600 BMO Harris branches in the United States.
Check out BMO Mortgage Rates Here.