Stay Away From BMO’s New Low-Interest Mortgages

Check out this RANT I just received from my mortgage broker.  It’s so good, I just had to put it up as a blog post.

It was triggered after Bank of Montreal dropped it’s mortgage rates again, which will likely cause many people to lock in with them for a long-term mortgage.

I’ve been saying for years that all mortgages are NOT created equal — the devil is in the details, or in this case, the contract!

But most people just focus on interest rates, which is the WRONG thing to do, whether you are a real estate investor or just a regular home owner.

Before you lock in that ‘ultra low’ rate, you have to read this.

And please pass this on, as it is important…

***Please warn your friends and co-workers****
The mortgage market is a very competitive business. BMO’s new 2.99% 5 year mortgage is a sheep is wolf’s clothing. Mortgage brokers have had this kind of no frills product for years and most of us never sell it for good reasons. It is a lawsuit waiting to happen. In 13 years, I have given a no frills product 4 times.

I would prefer everyone take a mortgage through my firm but good god PLEASE NOT THIS BMO product. Go to RBC, or Alterna anyone but this locked in BMO mortgage.

If this comes up at the water cooler please make sure all your friends and co-workers clearly understand what they are getting into. The average Canadian does something with their mortgage every 3 years. That is they move, refinance, increase or decrease the mortgage.

Life happens.

This mortgage is 100% closed for 5 years or OMG the 10 year! I cannot imagine being locked into BMO for 10 years. I cannot commit that long to a pair of socks let alone being 100% “too bad so sad” committed to a bank.

I highly doubt that once you are locked in, BMO will give you the “lowest rate of the day” when you need to refinance, move, sell, increase etc. You will have no choice but to:

A) Sell the house and pay a HUGE penalty
or
B) Take the posted rate. Compare the difference to the normal BMO mortgage at 3.49 …

http://www.bmo.com/home/personal/banking/mortgages-loans/mortgage/compare

I am writing this just so that people are aware. I have spoken to many clients who called BMO about this product and the conditions where glossed over.

If someone wants to take a product like this, ask them to go see a mortgage broker and we give them an Industrial Alliance mortgage at 2.99% or less at least when they refinance it won’t be a posted rate.

If you really want a good deal, I can get you an ING 10 year at 3.89%.

I know this is a bit of a rant, but I get tired of seeing customers getting taken advantage of.

 

If you’d like to learn more about my mortgage broker, and how he can get the best mortgage for you (not just the best rate!), be sure to check out this page…

CLICK HERE to get the best mortgage

for YOU and your situation

PS – Some people think this is a marketing ploy by BMO to gain more market share in a competitive market.  What do you think?

Leave a comment below, and please pass this on

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Paul Blacquiere

Paul is an entrepreneur, investor, speaker, and educator.
He's experienced in multi-family properties, renovation, flips,
joint ventures, and is Canada's top RRSP mortgage expert.
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Latest posts by Paul Blacquiere (see all)

  • Barb Haskell says:

    I’m still wanting to build a building to house a musical retreat; will run similar to a B&B but be called something else … working on a business plan for it …

  • Paul C says:

    Great rant. So true. On another note, I think the term is “wolf in sheep’s clothing” (i.e. something dangerous disguised as something non-threatening). A “sheep in wolf’s clothing” would be something non-threatening disguised as a mean old wolf… Sorry, I’m a bit of a grammar nazi…

    • Paul Blacquiere says:

      LOL You are correct. I think the last thing people think about when they are ranting is… grammar! 🙂

  • Robert says:

    Shame on BMO for even offering such a product and especially for glossing over the details! We’re supposed to be able to trust our institutions. Thanks for the warning Paul!

    • Paul Blacquiere says:

      Thank my mortgage broker for catching this one. I always recommend reading the mortgage contract, in detail, because you never know what terms and conditions they have buried within it.

      Banks are in the business to make money… I just like to make sure it’s someone else’s money, not mine. 🙂

  • Mike Bonito says:

    Hey Paul,

    I got caught by this type of thing once before with a loan from Home Trust. I did go with a broker who was not as thorough as yours and never made any reference to it even after I asked for a mortgage I could refinance after a year.

    Nonetheless, the only good thing was that it was only for 2 years but it was quite a shock when I could not transfer mortgage companies.

    • Paul Blacquiere says:

      Wow, I can’t believe he got you into that product even after you told him you wanted to refinance.

      Reading legal agreements may seem boring to many, but I guess that’s the reason why it pays to read the contract before you sign!

  • Lisa says:

    Thank you very much for telling people the truth. I am looking for 5 year fix mortgage. How about the 2.84% from Industrial Alliance mortgage?

    Thanks again for any your suggestion!
    Lisa

  • tina says:

    Hi there, I am currently with RBC and my mortgage comes up for renewal in October 2015, I was thinking of calling them to lock-in for a 5 year fixed rate at 2.99% that they’ve been offering and referring to as an employee rate to the public. Just wondering what your thoughts are on this. I currently have 3.64% so this is a little better and some protection if rates go up later on.

    • Paul Blacquiere says:

      Hi Tina,

      I recommend you contact my preferred mortgage broker to help you find the best rate and more importantly, the best terms for your mortgage renewal.

      Often times there are conditions and penalties hidden in the contract that you won’t discover until it’s too late.

      Click the link below and enter your contact info to have someone from his office call you back to discuss your situation.

      https://www.spirepoint.com/products-services/investor-services/mortgage-financing/

      Hope this helps

      Paul

  • Denise Daley says:

    So my parents whom are 76 and 74 got suckered into this. My father is on a pension and can barely afford a coffee once the mortgage is paid for the month. It has been 2.5years and my mom recently came into enough $ to pay off the mortgage completely and give themselves some financial freedom finally. Unfortunately they were told it would not happen unless they sell their home. I am beside myself as they did not have any idea the rules behind this type of mortgage and would never have signed if they had.

    If anyone has any suggestions it would be appreciated!


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