The Bank of Montreal (BMO) has been operating since 1817 and is one of Canada’s Big Six banks. BMO offers a full suite of banking products, including personal banking, business lending, investing, and wealth management services. It is also one of Canada’s best banks for mortgage solutions.
BMO mortgages are available for purchasing or refinancing homes, rental properties, vacation properties, and land. You can choose from variable and fixed-rate mortgages, with flexible terms ranging from 6 months to 10 years.
Read on for a detailed guide to help you make an informed decision on a BMO mortgage.
What are the Current BMO Mortgage Rates?
To secure the best rates, it is critical to consider the features of the different types of mortgage rates BMO offers.
BMO Mortgage Prime Rate
BMO Mortgage’s prime rate is currently 4.95%. Variable-rate mortgages and lines of credit move based on changes to the prime rate.
BMO Smart Fixed Mortgages
One unique mortgage product BMO offers is the Smart Fixed mortgage, a closed fixed-rate mortgage. In exchange for agreeing to some limitations on prepayment flexibility, it offers a discounted rate compared to BMO’s standard fixed-rate mortgages.
| Features | Smart Fixed Mortgage | Fixed-Rate Mortgage |
|---|---|---|
| Prepay in the first five years | No | Yes |
| Prepayment Limit | Up to 10% | Up to 20% |
| Interest rate | Lower | Higher |
A Smart Fixed Mortgage’s lower costs and predictable payments may appeal to borrowers who want payment stability and do not foresee needing to make major prepayments during their term.
To be eligible for the Smart Fixed lower rate, you must meet specific criteria:
- Minimum credit score of 600
- GDS and TDS ratios under 39% and 44%, respectively
- Live in the home you get a mortgage for
BMO Fixed vs Variable Rate Mortgages
With a fixed-rate mortgage, your interest rate and payment stay the same for the full term. A variable rate fluctuates based on the prime rate. The variable offers lower initial payments but carries the risk of increases if the prime rate rises.
| Term Length | BMO Posted Rate | BMO Special Rate |
|---|---|---|
| 1-Year Fixed | 7.34% | |
| 2-Year Fixed | 6.99% | |
| 3-Year Fixed | 6.54% | 4.94% |
| 4-Year Fixed | 6.34% | |
| 5-Year Fixed | 6.49% | |
| 5-Year Smart Fixed | 6.39% | 4.94% |
| 6-Year Fixed | 6.59% | |
| 7-Year Fixed | 6.69% | |
| 10-Year Fixed | 7.10% | |
| 10-Year Smart Fixed | 7.09% | |
| 5-Year Variable | 5.20% | 4.70% |
What are BMO Mortgage Products?
In addition to its standard mortgages, BMO offers specialty mortgage solutions for unique borrowing needs:
BMO Convertible Mortgages
BMO convertible mortgages let you change from a variable to a fixed rate during your term without penalty. This allows you to lock in a fixed payment later if variable rates increase.
BMO Closed vs Open Mortgages
Closed mortgages lock you into a contract with limited prepayment flexibility, but at lower rates. BMO’s closed rates are 0.5% to 2% cheaper than its open rates.
Open mortgages allow prepayment anytime without penalties, but have higher interest costs over the term. Open mortgages make sense if you plan to sell soon.
BMO Self-Employed Homeowner Mortgage
Self-employed individuals qualify for the same BMO mortgage rates and terms as other borrowers. However, you’ll need to provide supplemental income documentation such as:
- Last two years’ tax returns and Notices of Assessment
- Audited financial statements
- Statement of business activities
- Notice to the reader financial statements
BMO Investment Property Mortgage
For investment properties, BMO requires a minimum 20% down payment. If you occupy part of the property, you may qualify for as low as 5% down by obtaining mortgage loan insurance.
Other considerations for an investment property mortgage include:
- Property valuation and capitalization rate
- Location desirability
- Expenses like taxes, insurance and maintenance
BMO Homeowner Readiline HELOC
BMO Homeowner Readiline bundles a mortgage with a revolving home equity line of credit. As your mortgage balance decreases, your available credit increases. This consolidated option provides stability while allowing you to access funds if needed.
What are the key features of BMO Mortgages?
In addition to competitive rates, BMO offers several features that provide helpful flexibility:
130-Day Rate Hold
BMO provides a 130-day rate lock on pre-approvals for fixed-rate mortgages, the longest offered among Canada’s major banks. This locks in your rate for 4+ months during the home-buying process.
BMO Mortgage Prepayment Options
BMO allows extra prepayments to pay your mortgage down faster.
1. Increase your payments – You can increase your payments by up to 20% annually for most mortgages. For Smart Fixed mortgages, the limit is 10%.
2. Make lump sum payments – You can make lump sum prepayments up to 20% of the original mortgage annually (10% for Smart Fixed mortgages). These payments go directly against your principal.
BMO Accelerated payment options
You can make mortgage payments more frequently – weekly or bi-weekly – to reduce your principal faster. This lowers the amount of interest accrued between payments.
BMO Mortgage Protection Insurance
BMO lets you add optional mortgage life, disability and critical illness insurance to cover payments if you cannot work.
BMO Property Tax Payments
Your mortgage contract may require you to make monthly property tax payments to BMO in addition to your regular payments. This ensures taxes are paid on time.
BMO Mortgage Cashback Offer
BMO also provides special offers for new mortgages that can provide further savings. One of their promotions is attractive cashback rewards, which help reduce your overall mortgage costs. When shopping for different lenders, make sure to see what current promotions are available, as attractive signup bonuses can provide substantial savings. Check BMO’s website for full details about their current cashback offer.
How do you get pre-approved for a BMO mortgage?
Getting pre-approved starts the mortgage process off right. Here are your options with BMO:
Online – BMO allows full online pre-approval by submitting documents through their website. The online process is straightforward.
In-person – You can also meet with a mortgage specialist at one of the 900+ BMO branches. This allows you to ask questions and get personalized advice.
Documents needed – Provide financial information such as tax returns, pay stubs, IDs, and property details.
Once approved, you can shop knowing your budget and terms. To lock in your rate, take advantage of BMO’s industry-leading 130-day rate hold.
Tips to Get the Best BMO Mortgage Rate
Here are some tips that may help you get approved for better BMO mortgage rates:
- Improve your credit score – A higher credit score signals you are at lower risk.
- Make a larger down payment – 20%+ down avoids mortgage insurance.
- Reduce existing debts – Less debt improves your ability to carry a mortgage.
- Provide strong financial records – Documents that demonstrate you can make payments.
- Consider having a cosigner – Having a second borrower with good credit can help.
- Negotiate – Discuss getting the best possible rate for your situation.
The stronger your financial profile, the better mortgage rate you can qualify for.
What are Alternatives to BMO mortgages?
BMO is just one option among hundreds of mortgage lenders in Canada. Here are some strong alternatives to consider:
Mortgage Brokers – A broker shops multiple lenders and negotiates on your behalf. They can access better non-bank rates you can’t get directly.
Credit Unions – Credit unions offer very competitive rates and excellent customer service. First National and Meridian Credit Union are the top options.
Monoline Lenders – Specialized mortgage lenders like MCAP and First National provide online applications and low rates.
Online Banks – Digital banks like Tangerine feature fast e-approvals and discounted promotions.
Looking for the Best Mortgage Options? Discover our top Banks for mortgages in Canada.
- National Bank Mortgage
- RBC Mortgage
- TD Mortgage
- CIBC Mortgage
- Desjardins Mortgage
- Canadian Western Bank Mortgage
- ICICI Bank Mortgage
FAQs
What is the minimum down payment for a BMO mortgage?
The minimum down payment for properties under $500,000 is 5% of the purchase price. For properties between $500,000 and $999,999, it is 5% on the first $500,000 plus 10% on the remainder. Over $1 million requires a minimum 20% down payment.
What credit score is needed for a BMO mortgage?
BMO generally requires a minimum credit score of 600 for mortgage approval. Those with scores below 600 may need to consider alternative lenders. The higher your score, the better rate you can qualify for.
Can I get a pre-approval for a BMO mortgage online?
Yes, BMO allows you to complete the entire mortgage pre-approval process online by submitting your financial information through their website. You can also meet with a mortgage specialist in person.
Does BMO offer mortgages for investment properties?
Yes, BMO provides mortgages for rental properties and investment properties. You will need a minimum 20% down payment on investment properties financed through BMO.
What term lengths are available for BMO mortgages?
BMO offers mortgage terms ranging from 6 months to 10 years. The most common terms are 1-year, 3-year, 5-year, and 10-year fixed-rate mortgages.
Can I break my BMO mortgage contract early?
You can prepay a certain amount annually without penalty if you have a closed fixed rate mortgage. To fully break the contract early, you will pay a prepayment charge depending on your mortgage type. An open mortgage allows prepayment anytime without penalty.
Does BMO offer mortgages for new immigrants?
Yes, BMO offers mortgage options tailored to newcomers to Canada with alternative credit history documentation. Their multilingual mortgage specialists can also assist in multiple languages.
What mortgage insurance options does BMO offer?
BMO offers optional mortgage life, critical illness, disability, and job loss insurance to cover payments in case you cannot work or pass away.
As one of Canada’s largest banks, BMO provides various mortgage products, competitive rates and valuable features. Comparing quotes from alternative lenders ensures you get your best personal deal. With smart shopping, a BMO mortgage could suit your home loan needs.
For personalized mortgage advice on BMO Mortgage for your unique situation, contact our mortgage brokers at Best Mortgage Online, who can help you find the best mortgage option and save thousands.
