BMO Adds Customer Loyalty Rate to Offerings
Bank of Montreal is offering a new five-year fixed-rate mortgage for 3.75%, which is being advertised as the lowest among all banks. Take into account that the lowest posted rate for the same term fixed-rate mortgage is currently 5.85% almost everywhere else and it looks like a done deal.
Or does it?
There’s a catch or two that you might want to seriously consider before signing up for this one. In return for BMO’s rate, you have to give them your loyalty for the life of the loan. The only way to get out of the mortgage is to sell the property.
True, if the rate is the current lowest going around, you may not be in a big rush to refinance your mortgage, but personally, I have issues with being locked into one lender.
This mortgage also comes with prepayment restrictions. Mortgage holders can only pre-pay 10% of the principal in any calendar year (other banks allow as much as 20%). Also, customers can only increase monthly payments by 10% (other banks allow up to 20%).
Would you be willing to accept stricter rules for a lower rate?
