Last week BMO and later TD Canada Trust launched a 5 year promo with a 2.99% fixed rate. Though this is an excellent rate there are conditions that will limit its use. Currently it is a two week promotion, valid until January 25th. The main terms of BMO's special are as follows:
- Maximum amortization is 25 years.
- Rate hold up to 90 days.
- Pre-approvals are allowed.
- Lump sum pre-payments: 10% maximum per year (half of the 20% normally allowed).
- Optional payment increase: 10% maximum per year (half of the 20% normally allowed).
- Term: Fully closed unless you sell the property, refinance (with BMO only) or early renewal into another BMO mortgage.
- BMO Skip-a-Payment: Not available.
- Other details: Not available to non-owner occupied rental properties.
Most importantly, client is tied to BMO for the entire 5 year term of their mortgage, even if they want to break it and pay a penalty, they are forced to stay with BMO. Client loses negotiating power. Average 5 year term with most lenders today for qualified buyers is 3.39% and the 4 year term is available at 2.99%.