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BMO encourages 25-year amortization period with low rate incentive

In a news release yesterday, BMO states that nearly seventy percent of Canadians are “open to the idea of shorter amortizations.” The big bank is encouraging borrowers to consider the shorter, more traditional amortization period by offering low mortgage rate of just 3.54% on their five-year fixed, currently their lowest fixed rate option.


The BMO release offered the following tips for becoming mortgage free faster.


Consider a shorter amortization

  • The shorter the life of the mortgage, the less you pay in interest.
  • A shorter amortization means that you can become mortgage free faster and begin saving more for retirement.

Make sure you can afford what you signed up for

  • Stress-test your financial budget using a mortgage payment based on a higher interest rate.
  • Total housing costs (mortgage payments, property taxes, heating costs, etc.) should not consume more than one-third of household income.

Make a larger down payment

  • If you can provide a bigger down payment, it's a significant way of helping you pay less interest over the life of your mortgage.
  • If you make a down payment of least 20 per cent, you avoid paying mortgage default insurance.

Make pre-payments when you can

  • Pay weekly or bi-weekly instead of monthly.
  • Increase your mortgage payment (principal and interest).
 This option can be exercised once each calendar year, at any time, without charge.

Think carefully about fixed vs. variable


While variable rates mortgages have been a winning strategy over the long term, fixed rate mortgages (currently at historic lows) come with the peace of mind of being insulated against rate increases and knowing how much of your mortgage you will have paid down at the end of your term.


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Norm Fisher
Royal LePage Vidorra

Norm Fisher, Author of the TeamFisher Saskatoon Real Estate Blog

About Norm

Licensed in 1993, Norm brings a wealth of experience to TeamFisher. He has worked in every imaginable capacity including sales agent, office manager, team leader, broker and now, broker/owner. Norm has written a weekly review of the Saskatoon real estate market for more than 650 consecutive weeks which may make him the most consistent industry blogger in the world.Less...

Licensed in 1993, Norm brings a wealth of experience to TeamFisher. He has worked in every imaginable capacity including sales agent, office manager, team leader, broker and now, broker/owner. Norm has written a weekly review of the Saskatoon real estate market for more than 650 consecutive weeks which may make him the most consistent industry blogger in the world.

Norm is known for his passion for technology and can most often be found exploring and experimenting with the next big thing in real estate marketing. He was the first Saskatoon real estate agent to promote a home online and has been an early adopter of new technologies ever since. “Everything about this business has changed over the past 20 years, and it will happen again in the next ten. An open mind and a curious attitude are all that’s needed to continue to find new ways to serve our clients by delivering a faster, smoother, worry-free transaction,” says Norm.

In his spare time, Norm enjoys Crossfit and cycling, some years accumulating over 2,000 kilometres on the road. He’s a strong supporter of the Royal LePage Shelter Foundation and enjoys raising funds by joining fun, fitness-related initiatives like the Grouse Grind for Shelter. In 2015, he trekked the Peruvian Andes to Machu Picchu. In 2017 he walked the southern highlands of Iceland across mountains, sand, snow, ice, lava fields and forest for seven days. Collectively those initiatives raised over a million dollars for Canadian women's shelters.
 

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