Bank of Montreal : For Mortgage Amortizations, 25 is the New 30-Get 2.99 per cent With BMO's Low-Rate Mortgage

TORONTO, ONTARIO--(Marketwire - Jan. 13, 2012) - BMO Bank of Montreal is encouraging Canadians to make responsible financing decisions and choose a mortgage with a 25 year amortization.

Canadians have set a record for household debt. According to the Bank of Canada, the debt burden has exceeded levels in the United States and the United Kingdom. The ratio of debt to personal disposable income is now more than 150 per cent, and Bank of Canada Governor Mark Carney has issued a warning to Canadians to be cautious with their spending.

"Canadians must continually examine ways to reduce overall housing costs," said Katie Archdekin, Head of Mortgage Products, BMO Bank of Montreal. "BMO has been a leader developing products, such as the low-rate mortgage with a maximum 25-year amortization, that we believe are directly relevant to today's environment and specifically designed to help Canadian consumers manage their debt. In September, BMO urged Canadians to choose a 25-year amortization as a way to significantly reduce the amount of interest paid over the life of the mortgage."

BMO Bank of Montreal has lowered the rate for its 5 year low-rate 25 year amortization mortgage by 50 basis points to 2.99 per cent. This special rate is available until January 25th, 2012. By getting pre-approved, customers have up to 90 days to search for the home of their dreams and take advantage of a guaranteed low rate that won't be around forever.

BMO offers the following tips for Canadians to help them reduce mortgage debt and become mortgage free faster:

Consider a shorter amortization:

• The shorter the life of the mortgage, the less you pay in interest.
• Choosing a 25-year amortization can help you become mortgage-free faster and ultimately put more savings towards long term goals, such as retirement.

Make sure you can afford your home, both now and in the future:

• Stress test your financial budget using a mortgage payment based on a higher interest rate. If your rate rises even 1 percentage point from 5 per cent to 6 per cent, you will need an additional $146 per month on a $250,000 mortgage amortized over 25 years.
• Total housing costs (mortgage payments, property taxes, heating costs, etc.) should not consume more than one-third of household income.

Think about the future:

• View your home as an investment. Consider its location and accessibility, and whether or not renovations may be required down the road.
• Pay down short term debt before taking on a major financial commitment such as buying your first home or upgrading to a larger home.

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.
• With a down payment of at least 20 per cent, you avoid paying mortgage default insurance.

Make pre-payments when you can:

• Make accelerated weekly or bi-weekly payments instead of monthly payments.
• Increase your mortgage payment (principal and interest).

Think carefully about fixed vs. variable:

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

Matt Duffin, Toronto
416-867-3996
[e-mail]

Sarah Bensadoun, Montreal
514-877-8224
[e-mail]

Laurie Grant, Vancouver
604-665-7596
[e-mail]