The Bank of Montreal (BMO) offers a wide range of mortgage alternatives that allow for different combinations of fixed and variable rates with closed, open and convertible terms. Mortgages come in varied sizes and shapes. Whether you decide to make a small payment or a large one, make additional payments without cost, offset your mortgage anytime or even try out a short-term mortgage rate before committing yourself to a long-term fixed rate. There are several mortgage rate options offered by BMO to meet your needs.
With an open mortgage, you have the opportunity to make additional payments anytime you want without any penalties. As a result, you can pay off your mortgage, faster and save money that would have been used on interest payments. You should expect that you will pay higher interest rates compared to a closed mortgage due to the flexibility that comes with an open mortgage.
Unlike the open mortgage, closed mortgages come with a much lower interest rate, but do not permit extra payments without additional costs or penalties. Because they have lower interest rates, they are more popular among clients than open mortgages.
A Convertible Mortgage
This mortgage makes it possible for you to change from a short-term closed mortgage to an extended fixed rate without any extra cost. An added advantage is that you can also take advantage of the low interest rates associated with a convertible mortgage.
The following is an outline of BMO’s open, closed and convertible mortgage options.
Open 6-month, 1-year, and 18-year
This mortgage type allows for all-out flexibility; you can choose to make your prepayment in full or in parts any time you want, without extra cost. You can also convert to another term any time with no charges. This is especially suitable if you are consider selling your home or if you want to prepay above 20% of your total mortgage amount.
This allows you to change to a closed term of one year or more at any time, with no charge. An added advantage is that you can enjoy lower rates while keeping your options open.
Closed 1 to 7 years, and 10-year
Here, the payments and interests rates are fixed for the term you choose. There is also the option of mortgage prepayments. This is suitable if you want a predictable budget. You can also enjoy a lower rate with a closed mortgage compared to an open mortgage.
These are also fixed for the term an individual chooses. You will also get lower rates compared to a fixed rate closed mortgage of the same term. This is suitable if you want a steady mortgage rate that is simple and easy to understand.
It is vital that you compare BMO mortgage rates with other financial institutions to check if you are paying a competitive rate.