BMO NO FRILLS mortgage 2.99% is back… but please don’t read the fine print…
Ladies and Gentlemen, here’s a quote from Mr. Frank Techar, head of BMO’s domestic retail bank as published in The Financial Post “We believe these products will allow our customers to borrow smartly,” I couldn’t agree more… After you spend some time reading the product details, you are sure to turn around and run.
BMO’s NO FRILLS mortgage is back…2.99% for 5 yrs fixed and 3.99% for 10 yrs fixed until March 28. Both come with the same restrictions and limitations as before… We give this product a BIG THUMBS DOWNS! We recommend you stay away from this type of product.
Even thought I don’t like the product, I do like seeing these product announcements… they create a buzz and get competitors to react. It’s great for business.
First off, let me say, there are LOWER unadvertised rates out there…you can get another NO FRILLS 5 yr fixed at 2.95% and a REGULAR 10 yr fixed for 3.94%…..Now that I have your attention, I strongly recommend you read the details before making a decision…. mortgages can be complicated. Don’t make the wrong a decision.. speak with a Mortgage Broker.
What makes this product different from their regular line of mortgages are the restrictions and limitations. In January, BMO made headlines when they first announced this so-called ‘special offer’. It’s special alright… READ THE PRODUCT OVERVIEW… In January, I warned against taking this product…. my warning has been reactivated…. Once you read the fine print, you will realize this product is not suitable for most of us..it’s just a lot of smoke and mirrors trying to get you in the front BMO door.. a good marketing ploy… and I’m sure they’ll gain market share because of it. But let’s make sure you understand the fine print…
YOU STILL WANT THAT BMO NO FRILLS RATE?
But let’s say you’ve read all the fine print and still want this product… I’ve got news for you…. There are BETTER PRICED NO FRILLS PRODUCTS…. As a Mortgage Broker I have access to better unadvertised rates… Only problem is, I don’t have a $500million advertising budget… So I have to rely on providing my clients with good advice…Fortunately, my good advice has served me well and 95% of my business comes from repeat clients and referrals.
MY ADVICE
No Frills products came out around 8 years ago and my advice has been the same. DON’T TAKE these products. If you do, chances are you will not come back to me as a satisfied client. I can kiss your future business and future referrals good-bye. And I can’t afford to do that. That’s why you’ll NEVER see me promote or recommend these products. Yes, I have access to them but I’m going to do everything in my power to steer you clear of them.
WHAT’S AVAILABLE TODAY
Interest rate is probably the most important part of a mortgage but it’s not everything. Did you know that there are excellent 5 year fixed rate products hovering between 3.19% and 3.29%? and 10 yr fixed rates of around 3.94%? Why are these better? You don’t have to give up your options. You don’t have the restrictions of a NO FRILLS product, like BMO’s ‘low-rate mortgage’. You have full prepayment privileges.. you can payout the mortgage without having to sell your home.. you can refinance with any lender and not just your original lender… meaning you will be able to negotiate a competitive rate should you need to refinance. On average, Canadians refinance their mortgage every 3 years… This happens for a number of reasons.. selling their home, debt restructuring, family issues, work issues, etc…. Mortgage penalties charged on these NO FRILLS mortgages can be outrageous… we’ve seen penalties of up to 14, 16 and even 20 months worth of interest… Don’t put yourself in that situation…
Get all the facts and then make a decision.
Categories
Interest rates, Mortgage News, Mortgage Products, Mortgage Trends
Steve Garganis View All
As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.
CanadaMortgageNews.ca 
Great article. I hope people know exactly what the terms and conditions are before they jump at this 2.99% rate. The rate looks good on paper but is it worth the restrictions that are most likely attached to it?
Hi Lewis,
Yesterday, I fielded dozens of calls from existing and pending clients… they read the headlines. 2.99% for 5 yrs fixed… And that’s as far as they got… My job and my challenge to get them to look deeper… but once they do, it becomes crystal clear that this product is terrible… and it will end up costing hundreds of borrower dearly in the future…
My advice, look beyond the rate…
Steve
RBC made profits of $5,223,000,000 on revenue of 36,026,000,00. All this despite low mortgages. I cannot see why they cannot give more decent mortgage rates that can get the Canadian consumer off debt faster. Wait, I know, RBC needs us to owe them money longer! What idiots we are.
Why not let some Japanese Banks lend us C$ based mortgages while they have a high yen? If the yen devalues, it simply means even cheaper rates for Canadians, and a faster way out of household debts. Oh, silly me, RBC and their ilk will not want their golden geese in Japanese Bank’s hands, eh?
Well, while we the consumer gets fleeced by this bunch to bankers, they are quietly sipping a drink in their penthouse. offices.
Wow, thanks for making me think. It’s not like Bank of Montreal tells you much in the application process (the downsides are not openly mentioned.)
The Prepayment options and flexibility of Payout/Refinancing options alone are worth being a lot more cautious. Key in buying a fixed term is the phrase ‘…WITH ALL THE OPTIONS’ – ask for this and be sure to understand it in each case!