That isn't 'entirely' true, as it never really went away to begin with as I have been offering 2.99% 5 year fixed to my clients since mid January. Now that BMO is brought back this promotion, it is important to point out that all rates are not created equal.
Last time around, (and even this time) some articles were stating that other banks were quick to match the rate. This isn't exactly true. They matched the rate, but on 4 year fixed terms, not 5. Two different products.
So let's look at the 'catches' with the BMO product:
- maximum 25 year amortization (their website says 'for people who want to become mortgage free in 25 years'. Clever marketing, but a little misleading as there are many borrowers who go with 30 year amortization and are committed to getting it paid off faster. Any lump sum payment will significantly accelerate the pay off of the mortgage. I digress)
- 10% prepayment privilege
- Fully closed for the full 5 year term. This means that you cannot pay the mortgage off in full unless the house is sold through to a non family member for fair market value through a real estate agent. This also means it can't be refinanced during the term, unless done through BMO (guess who has the negotiating power in that situation?)
The 2.99% rate that I offer is different in the following ways:
- Up to 30 years amortization - Fully closed for the first three years of the 5 year term - 15% prepayment privileges - Must close within 60 days
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