BMO announced yesterday, the lowest advertised 5-year fixed rate ever for a Canadian bank at 2.99% for a 5-year fixed .
Here is the main restriction in the fine-print:
[box]Once you close, you cannot discharge this mortgage for five years unless due to a bona fide sale of the property.[/box]
Why this is not a good deal?
- Most people refinance their mortgage within 3 years so this really isn’t the best deal. You are possibly stuck with a mortgage you cannot get out of.
- Monthly payments can only be increased by 10% instead of typical 20%.
- Annual-lump sum capped at 10% instead of 20% of balance.
- Only available until January 25, 2012
- Must accept amortization period of 25 years instead of 30 years.
I personally believe that there is a very good chance that your variable rate will outperform this fixed rate over 5 years. This fixed term has a lot less flexibility as well.