Last week, BMO dropped a bombshell when they announced a 5-year 2.99% mortgage. As soon as the other major banks heard, they quickly scrambled to match. What these banks aren’t telling you is the terms of the mortgage, which are slightly different than what you’d find in a typical mortgage.
- 25 Year Amortization – Most mortgages can be amortized up to 30 years, which means it may be more difficult to qualify for this product.
- Paying Down Your Mortgage Faster – You can make a lump sum payment once a year as well as increase your monthly payments if it doesn’t exceed 10% of the principal you owe. Typical mortgages let you make monthly and lump sum pre-payments of 20% or more.
- You Can’t Skip Or Double-Up On A Payment.
- Locked For 5 Years – You can’t refinance or switch your mortgage to another lender for 5 years, and most homeowners live in their homes less than 5 years.
This product is best-suited for those who intend on living in their homes for more than 5 years.
