Bank of Montreal (BMO) Mortgage Rates 2022

Bank of Montreal (BMO) Mortgage Rates 2022

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated January 27, 2023

What Mortgage Rates Does BMO Offer?

The interest rate you’ll receive for a BMO mortgage depends on a few factors, including whether or not you opt for a fixed or a variable-rate mortgage and whether or not you have a 20% down payment.

BMO Mortgage Rates January 2023

High Ratio Mortgage Rates

High Ratio Mortgage Rates

TermRate
1 year fixed6.04
2 year fixed5.70
3 year fixed5.19
4 year fixed5.18
5 year fixed5.14
6 year fixed5.39
7 year fixed5.59
10 year fixed5.78
5 year variable6.49

Conventional Mortgage Rates

TermRate
1 year fixed6.12
2 year fixed5.80
3 year fixed5.29
4 year fixed5.34
5 year fixed5.24
6 year fixed5.54
7 year fixed5.74
10 year fixed5.93
5 year variable6.54

BMO Fixed-Rate Mortgages

A fixed-rate mortgage means your interest rate remains unchanged throughout your chosen term. This protects you from future rate spikes and keeps your mortgage payments stable and predictable. For this reason, many borrowers who have a low appetite for risk appreciate the predictability of fixed-rate mortgages that are easier to budget for. 

When you get preapproved for a BMO mortgage, their fixed interest rates are guaranteed for 130 days.

BMO Variable-Rate Mortgages

Unlike a fixed-rate mortgage, a variable-rate mortgage means your rate will fluctuate with the BMO prime rate. If the BMO prime rate increases, so will your interest rate, which means more of your mortgage payment will go toward the interest portion of your mortgage. But if it decreases, your rate will also dip, and more of your payment will go toward your principal.

Keep in mind that with a BMO variable rate mortgage, your scheduled mortgage payments will remain the same even if the BMO prime rates changes. This helps bring predictability to your budget and cash flow. 

 If you take out a variable-rate mortgage, you’ll have the flexibility of converting to a fixed-rate mortgage at any time.  

What Mortgages Does BMO Offer?

BMO offers a variety of mortgage options for homebuyers and homeowners alike, including the following.

BMO Homeowner ReadiLine

BMO’s Homeowner ReadiLine product combines the features of a BMO mortgage and a home equity line of credit (HELOC). If you have accrued enough equity in your home or put down a sizable down payment when you bought it, you may be eligible to borrow as much as 80% of your home’s current value split between a mortgage and a line of credit. 

You can use the line of credit to fund home renovations, post-secondary tuition fees or other significant short-term expenses. 

With the BMO Homeowner ReadiLine, as you pay off the mortgage portion, the principal you repay increases the limit available on the line of credit portion. This will help you access your home’s equity as you pay down your mortgage. 

Mortgages For First-Time Home Buyers

BMO works with first-time homebuyers to help them put their best foot forward when applying for a home loan. With BMO, you’ll get expert advice and guidance to help you become familiar with all your loan options. You can also get pre-approved and lock in your rate with no commitment.

BMO will also walk you through the various programs available to first-timers, including the following:

  • Home Buyers’ Plan. Borrow up to $35,000 from your RRSPs to purchase your first home.
  • First-Time Home Buyers’ Tax Credit. Claim a $5,000 non-refundable income tax credit for buying an eligible property when you file your income taxes.
  • GST/HST New Housing Rebate. Get back some of the GST or HST you paid to purchase, renovate, or build your home.

BMO also offers its Default Insured Borrowed Down Payment Program which allows you to borrow the full down payment up to 9.99% of the home’s purchase price. This can be very helpful given the large amount typically required for down payments, which can be tough to gather without the proceeds of the sale of a previous home.

Mortgage Renewal

Once your loan term comes to an end, you’ll need to renew or refinance it unless you intend to fully repay the mortgage. If you plan to renew your mortgage with BMO, get in touch with the bank to review your renewal options, which may include paying off your current loan with new terms or changing your payments or payment frequency to better suit your current situation.

This should be a very fast and simple process, especially if you already have a mortgage with BMO.

Mortgage Refinance

Refinancing your mortgage allows you to borrow more money using the equity you have in your home. Depending on how much equity you have in your home, you may be able to free up that equity when refinancing and use the funds to cover a variety of large expenses. With BMO, you can refinance your home loan to borrow up to 80% of your home’s value. 

There may be early repayment penalty fees involved with a BMO refinance that you should be aware of. BMO’s posted mortgage interest rates are the rates that the bank uses to determine your mortgage break penalty, which is the fee you pay if you want to pay off or refinance your mortgage early. Make sure the savings are worth the costs involved before refinancing.

Mortgage Flexibility With BMO

BMO customers have the flexibility to make changes if their current arrangement is no longer suitable. For instance, you can switch from monthly mortgage payments to weekly or bi-weekly payment schedules to speed up the process of repaying your mortgage, which can help you save money in the long run.

Open vs. Closed Mortgages

Among the various decisions to make when applying for a mortgage is whether to opt for an open or a closed mortgage.

Open Mortgages

An open mortgage offers more flexibility in terms of when you choose to repay your mortgage. With this arrangement, you’re free to pay off all or part of your home loan at any time throughout the term without being subject to an early prepayment penalty fee. In exchange for this flexibility, open mortgages usually come with higher interest rates compared to closed mortgages.

If you plan to make early repayments that exceed 20% of the original principal amount or you plan to sell your home in the near future, an open fixed-rate mortgage from BMO might make sense.

Closed Mortgages

Unlike open mortgages, closed mortgages cannot be prepaid or refinanced before the loan term ends without paying an early prepayment penalty fee. Despite these limitations, closed mortgages typically offer lower interest rates compared to open mortgages.

That said, you may be able to prepay a certain percentage of the original loan amount every year without penalty.

How To Get Pre-Approved For a BMO Mortgage

Before applying for a mortgage, it’s best to get pre-approved first to determine your mortgage affordability so you’ll have a clear idea of how much you can afford to spend on a home purchase. Mortgage pre-approval will reduce the risk of putting in an offer on a home you can’t afford and will streamline the house-hunting process. 

In addition, pre-approval will make you a stronger candidate in the eyes of sellers. It will also speed up the final mortgage approval process once you’ve sealed the deal on a home purchase and are ready to obtain financing. 

To get pre-approved for a mortgage with BMO, follow these steps:

Step 1: Provide All Required Information

BMO will require some personal information to get the pre-approval process started, including the following:

  • Statement of debt. This includes all your loans, bills, credit cards, and other debt you carry.
  • Statement of assets. This includes information about all your bank accounts, investments, real estate, vehicles, and other assets of value.
  • Government-issued ID. Documents like your driver’s license or passport are required to verify your identity.
  •  Your employment. This includes a letter of employment, pay stubs, or tax receipts.

Step 2: Apply

When you’re ready to apply for pre-approval, you can do so online, in person, or over the phone. 

Step 3: Get Pre-Approved

Once you complete your application and supply all your information, a BMO mortgage specialist will get back to you within a day or two. The rate and terms will be guaranteed for 130 days. There’s no obligation to carry through with a formal mortgage application, but if you do, you’ll have peace of mind knowing that the rate you’re quoted won’t change until the 130-day period is up. BMO has the longest rate guarantee of any major Canadian bank.

What To Expect From The BMO Mortgage Application Process

When you formally apply for a mortgage with BMO after your offer on a home is accepted by the seller, you can expect the following to take place: 

Provide the lender with all necessary information. If you’ve already been pre-approved, you’ve already provided BMO with most of the documentation they require. If not, you’ll need to supply BMO with documents to verify your income, assets, debt, and credit health. 

Provide the lender with your real estate contract. Once the seller accepts your offer, the lender will require the contract to find out exactly how much you agreed to pay for the home. The lender needs this information to determine how much of a loan you need after your deposit and down payment have been accounted for. 

Get the house inspected. Next, you’ll need to hire an inspector to complete an inspection of the house you want to buy. Most lenders will want to make sure there are no major issues with the house in question before they lend you the money. 

Take out property insurance. Your lender will also likely require that you take out a house insurance policy before completing the mortgage process. 

From start to finish, the mortgage approval process can take anywhere from 18 to 40 days, depending on whether or not there are any hiccups in the process. But getting pre-approved and making sure the lender has all required documents from the get-go will help the process move along faster.

BMO Prepayment Penalty

When you sign your mortgage contract, you agree to all the terms of your mortgage, including when to fully repay the mortgage. But what happens if your financial situation improves, and you want to put more money towards your mortgage to pay it off early?

In many cases, paying off a mortgage early comes with penalty fees, unless stated otherwise in your mortgage contract. With BMO, there are two types of prepayment penalties to be aware of:

Variable-Rate Closed Mortgages

The early prepayment penalty fee is 3 months’ worth of interest based on the rate on the day of prepayment.

Fixed-Rate Closed Mortgages

The early prepayment penalty fee is either 3 months’ worth of interest calculated at the applicable fixed rate or an amount calculated with interest rate differential (IRD).

What Is The Interest Rate Differential (IRD)?

The IRD is the difference between your mortgage rate and the current posted interest rate charged for mortgages similar to yours for the rest of the loan term, factoring in any rate discount received.  

If you prepay a closed mortgage within the last 3 months of the loan term, the early prepayment penalty fee is equal to the interest on the amount you’re paying off, calculated at the applicable rate on the date of prepayment.

How To Pay Off A BMO Mortgage Early

When you take out a mortgage, your loan contract will specify when the full loan — plus interest and all applicable fees — must be repaid. But during this time, you may consider paying off your mortgage sooner, especially if your financial situation approves at some point. 

If you choose to put more money toward your mortgage to repay it early, there are a few ways to do it, as long as your lender allows it: 

Increase Your Mortgage Payments

Bigger monthly payments mean you’re putting more money toward your principal every month and whittling down your mortgage balance quicker. You can increase your mortgage payment amount once a year by up to 10% of your mortgage payment amount (as of the beginning of the year) with a smart fixed closed mortgage, or 20% of your mortgage payment amount (as of the beginning of the year) for any other type of closed mortgage.

Make A Lump Sum Payment

Most lenders allow borrowers to make at least one lump sum payment per year, which would go entirely toward the principal portion of your mortgage. With BMO, you can make lump-sum prepayments each year without a prepayment charge (minimum of $100), up to a maximum of 10% of the original mortgage amount for a BMO Smart Fixed Mortgage OR 20% of the original mortgage amount for any other kind of closed mortgage.

Pay More Frequently

Making payments on a weekly or bi-weekly basis will help you pay off your mortgage sooner compared to monthly payments. For instance, bi-weekly payments equate to one additional monthly payment each year, which means you’ll pay your loan off more quickly and save on interest.

BMO Mortgage FAQs

How do I get a mortgage with BMO?

To secure a mortgage with BMO, you’ll need a healthy credit score of at least 600, steady employment, sufficient income, and manageable debt. The quickest and easiest way to apply is online via the BMO website.

What is BMO’s current interest rate?

BMO’s mortgage rates (amortized for 25 years or lower) as of today are as follows:
  • 5-Year Smart Fixed (closed): Starting at 5.54%
  • 5-Year Smart Fixed (default insured): Starting at 5.44%
  • 5-Year Variable closed: Starting at 6.25%

Does BMO have a prepayment penalty?

You can prepay your mortgage at any time without being subject to a prepayment penalty fee with an open mortgage and the revolving portion of a Homeowner ReadiLine. For closed mortgages, BMO offers flexible prepayment options that allow you to put extra cash toward your principal without prepayment charges, such as increasing your mortgage payments, making a lump sum payment, or increasing the payment frequency.

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Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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