The rate is nice, but the actual restrictions are pretty prohibitive if you try to pay early, make accelerated payments or want to make pretty much any changes to the payment schedule/amount. It is good if you want to sit on it for the next 5 years, but I can see it bringing in more people who probably shouldn't be getting into the home ownership game just yet. As a home owner, at least it will help to keep prices rising!!!
That rate is the lowest it's ever been from a major Canadian bank. The average 5 year fixed rate in Canada for the past 10 years is 6.32%. When I first bought my house I was close to 7%, so 2.99% is excellent news and does indeed make it a good time to buy a house if you are thinking about it.
I don't understand why you think it's hard to make any changes to your payment. You would get hit with a penalty is you paid off early, that is true. It would be either 3 months of interest (in my case less then $600) or there was another penalty that eludes me right now and obviously the bank would take the higher amount . Either way, the penalty was worth it, if you paid off early. That's a big if.
You do have the option to increase your monthly payments once per year as well as you have the option to make a one time payment of up to 10% of the balance, again once per year within that 5 years. So yes, you can make changes to your policy as long as you do it withing the contract.
However, I am accelerating my mortgage by overpaying it over $200 a month. I have been doing this for well over 10 years. I bought my house with a 25 year mortgage when I was 24 years old. I will have it paid off around my 44th birthday (I plan to increase payments towards the end once again). So I've reduced it from 25 years to around 20 years and change.
Either way, I still think it's worth any board member's time to call BMO and spend 15 minutes talking to one of their people. I saved 5 months of time and $538.31 cash just for making that one phone call.
