There’s been a wave of publicity this past week over BMO’s Low Rate Mortgage. While many people are initially attracted to a mortgage rate that’s 10 bps or more below other rates in the market, many clients don’t realize that those low rates typically signal a no-frills product that comes with significant limitations on what the borrower can do within the contract terms.
No-frills mortgages are stripped-down to eliminate features that add costs.
Typically, no-frills products are designed to appeal to purchasers who are highly cost-sensitive, such as those who might not qualify at higher rates, and home owners with limited opportunities to make prepayments.
While there is nothing wrong with choosing a no-frills product, just ensure you are aware of the limitations before determining whether a no-frills mortgage is, in fact, the right product for you.
Remember, not all mortgages are alike, there’s more to consider than just rate and ensuring the right fit with your needs is essential. If you had any questions don’t hesitate to contact me or leave a comment.