Canada’s Mortgage Market Right Now!

rate calculator1Here are things you need to know about the mortgage market as the spring home-buying season gets going:

That 2.99% BMO 5 year mortgage isn’t quite as good as it sounds. BMO’s recent move to bring its rate below the psychologically significant 3% mark for fixed-rate 5 year mortgages is being treated as a big deal because a similar move a year ago provoked then-finance minister Jim Flaherty to admonish the bank. What BMO is offering until mid April is a competitive rate in a mortgage with uncompetitive terms. Most importantly, you can’t break this mortgage before it comes up for renewal in five years unless you sell the property, refinance with BMO or do an early renewal into another BMO product. All the usual prepayment penalties would apply in these situations.

Other issues: -BMO will hold the rate for 90 days, compared with 120 days at some other lenders. -You can prepay 10% of the mortgage annually without penalty and increase your payment by 10% a year; 15-20% is the usual standard for both types of payment increase. -The skip-a-payment option – a bad idea, admittedly – is not available. -The maximum amortization period is 25 years; you can typically go up to 30 years if you have a down payment of 20 per cent or more.

* You can do better than 2.99 per cent. Late last week a 2.84% rate