With the news of BMO starting the largest mortgage-rate war of 2014, our phones are ringing off the hook with existing clients (and new clients) asking if we can match (or beat) this rate.
Our lenders are doing what they can do drop their rates and follow suit, which is very advantageous for our clients with mortgages closing in the near future, but it does make me want to present some information to our readers, noting that not all mortgages are created equal.
While BMO is offering a VERY low rate, there are several downsides to this mortgage.
The first, is that this is a fully closed term. You are not able to pay out your mortgage for any reason other than a bona fide sale if something comes up. This means that if you need to refinance, decide to move and want to port your mortgage, or find yourself in a position where you’re able to pay out your mortgage, this mortgage will not allow you that flexibility.
Additionally, your pre-payments are only 10% per annum, or a 10% monthly increase.
Most of the lenders that we work with offer generous pre-payment privileges (as much as 20%) and work with clients if they need to increase their mortgages during their term by blending the two payments. Also, their payout penalties are based on discounted rates (meaning a much more palatable number if you decide to move or pay the mortgage out for any other reason).
While other mortgage companies may not have made the news this week, it’s always good to ask questions before signing on the dotted line so that we can make sure we’re placing you in a product that’s right for you and meets your needs.
If you have any questions, drop us a line – we’d love to hear from you and help answer them!