BMO Mortgage Rates

BMO, or the Bank of Montreal, is one of the largest and oldest banks in Canada, offering a wide range of financial services including personal and commercial banking, wealth management, and investment services. It also offers a diverse range of mortgage products, including fixed-rate mortgages for stable monthly payments and variable-rate mortgages where payments can change based on BMO's Prime Rate. BMO also provides pre-approval services for mortgages, as well as resources and tools such as mortgage calculators to help customers understand their potential mortgage payments and choose a mortgage solution that fits their needs.

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BMO Mortgage Rates: Everything You Need to Know


BMO Financial Group Overview


BMO Financial Group is a well-established and highly regarded player in the banking sector. It has solidified its position as the eighth-largest bank in North America, boasting impressive assets totaling $1.15 trillion as of January 31, 2023. With a rich history spanning over two centuries, BMO has assembled a diverse team of passionate professionals who are dedicated to providing exceptional service.


The range of personal and commercial banking, wealth management, global markets, and investment banking products and services offered by BMO is extensive. This comprehensive suite of offerings caters to a vast customer base of 12 million individuals across Canada, the United States, and select international markets.


Now, let's dive into BMO's mortgage options, designed to meet the unique needs of prospective homeowners.


Fixed Mortgages: Your Reliable Choice


Imagine a mortgage where your interest rate remains constant throughout the entire term. That's precisely what BMO's fixed-rate mortgages offer. These mortgages provide stability and peace of mind, protecting you from any potential rate increases. By locking in your pre-approval rate for 130 days while you search for the perfect house, you can shop confidently, knowing that your rate is secure.

One of the key benefits of fixed-rate mortgages is the certainty they provide. Regardless of any fluctuations in interest rates, you'll always know exactly how much of your mortgage you'll pay off over the term. Additionally, BMO offers two types of fixed-rate mortgages:


Open Fixed-Rate Mortgage: This flexible option allows you to make prepayments at any time without incurring penalties.


Closed Fixed-Rate Mortgage: While you can't pay off your mortgage early or refinance before the end of the term without incurring a prepayment charge, this option offers stability and a locked-in rate.


Variable Mortgages: Flexibility and Potential Savings


If you prefer a mortgage that adjusts with BMO's prime rate, variable-rate mortgages might be the right choice for you. In this type of mortgage, your interest rate will change while your mortgage payments remain the same. When interest rates decrease, more of your payment goes toward the principal, potentially accelerating your mortgage payoff. Conversely, if rates rise, more of your payment will be allocated to the interest.


Similar to fixed-rate mortgages, BMO offers two variations of variable-rate mortgages:


Open Variable-Rate Mortgage: This option allows you to make prepayments at any time without any penalties.


Closed Variable-Rate Mortgage: With this choice, you won't be able to pay off your mortgage early, refinance, or re-negotiate until the end of the term, and you'll incur a prepayment charge equivalent to three months of interest.


Renewal and Switching Options


At the end of your mortgage term, BMO gives you the flexibility to switch your mortgage type when you renew. Some lenders even allow variable-rate mortgage holders to switch and lock in a fixed rate at any point during their term. If you're already a BMO mortgage holder, it's essential to review your existing loan agreement and discuss all the details with your lender before making any decisions.


Mortgage Pre-Approval: A Path to Your Dream Home


BMO's mortgage pre-approval process is designed to empower you on your home-buying journey. It provides numerous advantages and demonstrates your commitment to purchasing a home. Here are some compelling reasons to consider mortgage pre-approval:


Rate Lock Guarantee: BMO offers an impressive 130-day mortgage rate guarantee—the longest among major banks in Canada. This allows you to secure your rates and budget with confidence.


Competitive Edge: Pre-approval showcases your seriousness as a buyer to real estate agents and sellers, giving you an advantageous position in negotiations and setting you apart from the competition.


Confidence and Budgeting: Knowing your pre-approved mortgage amount helps you set a realistic budget and shop for homes with confidence. It ensures that you are looking at properties within your financial means.


Getting pre-approved with BMO is a simple, free, and commitment-free process. It starts by providing some necessary personal information, including details about your liabilities (such as debt, credit cards, and loans), assets (such as bank accounts, investments, and real estate), valid Canadian ID (like a driver's license or passport), and employment information (such as pay stubs or a letter from your employer). This information allows BMO to assess your eligibility for a mortgage pre-approval.


Pre-Approval FAQs:


New to Canada? - No problem! BMO considers each situation individually, taking into account factors such as your residency period and financial information. You may still qualify for a mortgage pre-approval.


Multiple Pre-Approvals - While you can obtain pre-approval from multiple lenders, keep in mind that each additional pre-approval might impact your credit score.


Rate Changes after Pre-Approval - If you get pre-approved for a fixed-rate mortgage and rates suddenly increase, BMO will honor the original lower rate for up to 130 days.


Understanding the Difference: Pre-Approval vs. Pre-Qualification


It's essential to distinguish between mortgage pre-approval and pre-qualification. Pre-qualification is a preliminary step that gives you a general estimate of how much you can potentially afford for a home. It doesn't require a hard credit check and is based on information such as income, assets, and debt. It's a quick process that provides a rough idea of your borrowing capacity.


On the other hand, mortgage pre-approval provides a detailed assessment based on a hard credit check and a thorough review of your credit report, personal information, and financial details provided in your application. Pre-approval remains subject to the absence of significant changes in the information you provided.


When to Get Pre-Approved?


In short, it's advisable to get pre-approved before you embark on your house-hunting journey. A mortgage pre-approval allows you to set your budget, manage expectations, and signal to real estate agents and sellers that you're a serious buyer with the financial capability to support your offer.


Increasing Your Mortgage Payments and Prepayment Options


BMO offers various ways to accelerate your mortgage payments and potentially reduce your overall interest costs:


Increased Regular Payments: Depending on your mortgage type, you can increase your mortgage payment once per calendar year. For a BMO Smart Fixed Mortgage, you can increase it by up to 10% of the current payment amount, while other closed mortgage types allow for a 20% increase.


Lump Sum Payments: You can make lump-sum prepayments each year without incurring any charges. The minimum prepayment amount is $100, and for a BMO Smart Fixed Mortgage, you can prepay up to 10% of the original mortgage amount, while other closed mortgage types allow up to 20%.


More Frequent Payments: Switching from monthly payments to accelerated weekly or bi-weekly payments can help you become mortgage-free faster, saving you significant interest costs over time.


Shortened Amortization: By increasing the amount of your regular mortgage payment (principal and interest) by up to 20% (10% for BMO Smart Fixed Mortgage) once per calendar year, you can reduce your amortization period and further minimize interest expenses.


BMO Prepayment Charges and Avoiding Them


BMO provides options to reduce or avoid prepayment charges:


Portable Mortgage Option: If you want to refinance your mortgage or purchase another home, you can transfer the existing terms of your fixed-rate closed mortgage or Homeowner ReadiLine fixed-rate closed installment to a new mortgage of the same type. This allows you to avoid prepayment charges. If you need to increase your mortgage amount, the existing fixed mortgage interest rate will be blended with the current fixed posted interest rate applicable to the additional mortgage amount, subject to qualification.


Mortgage Assumption: When selling your home, the purchaser may have the option to assume your BMO mortgage terms with BMO's approval. If your purchaser meets the usual credit requirements and all necessary paperwork is completed by your lawyer, BMO will release you from any personal liability on the mortgage. However, please note that this option is not available for Homeowner ReadiLine mortgages.


Additionally, if you plan to pay off your mortgage before the end of the term, consider using your allowable prepayment options to reduce prepayment charges. By utilizing these options strategically, you can minimize costs and potentially pay off your mortgage faster.


Considerations for Financial Flexibility


BMO also offers an open mortgage term, which can be beneficial if you anticipate selling the property or refinancing in the near future. Choosing an open term instead of a closed term allows you to avoid prepayment charges, particularly if it aligns with prevailing interest rates and your financial situation.

Furthermore, when you reach the end of your mortgage term, BMO allows you to make lump sum prepayments without incurring prepayment charges. This flexibility empowers you to reduce your mortgage balance and renew your mortgage term without any additional costs.


BMO Flexible Payment Options


BMO mortgage offers various options to support you when your finances are stretched. These options provide the flexibility you need to manage unexpected events and maintain financial stability. Let's explore some of the valuable mortgage payment options available to you:


Take a Break Option:


When money gets tight, you can take advantage of the Take a Break Option. With this feature, you have the ability to skip up to one month of mortgage payments per calendar year. Whether you choose to skip a monthly, bi-weekly, semi-monthly, or weekly payment, BMO has you covered. It's important to note that while this option provides temporary relief, interest will continue to accrue, resulting in slightly higher costs over time. However, you have the freedom to repay the skipped payments without incurring any prepayment charges. Please consult us for more details. (Not applicable to the BMO Smart Fixed Mortgage)


Family Care® Option:


In times of significant life changes, such as caring for a new baby or a sick family member, BMO understands the financial strain it can cause. That's why we offer the Family Care® Option, allowing you to skip up to four consecutive monthly payments, eight consecutive bi-weekly or semi-monthly payments, or sixteen consecutive weekly payments. This option provides much-needed support during challenging times, ensuring you have the flexibility to prioritize your family's well-being. Similar to the Take a Break Option, interest will continue to accumulate, but you can repay the skipped payments at your convenience without any prepayment charges. Certain conditions apply, and we recommend contacting us for further information. (Not available on the BMO Smart Fixed Mortgage)


Mortgage Cash Account:


By utilizing your prepayment options, you can create a Mortgage Cash Account within your mortgage. This account allows you to accumulate prepaid funds, starting from $2,500, and gives you the flexibility to reborrow these funds based on specific eligibility criteria. The reborrowed amount is then added to your mortgage principal at the existing interest rate for the remaining term, providing you with a financial cushion when you need it most.


Mortgage Protection Insurance:


Protecting your home and financial future is paramount, especially in the face of unexpected events. BMO offers Mortgage Protection Insurance, ensuring that your mortgage or mortgage payments are covered in case of unforeseen circumstances. With convenient and tailored coverage options, including 50% or 100% coverage, you can find peace of mind knowing that your loved ones and your home are secure.


BMO Life Insurance:


In the unfortunate event of your passing, BMO Life Insurance can take care of your mortgage balance, allowing your family to focus on what truly matters. You have the choice between 50% or 100% coverage of your mortgage balance, up to a maximum of $750,000. This coverage ensures that your loved ones are protected and can maintain the comfort and stability of your home.


BMO Critical Illness Insurance:


Facing a critical illness can be overwhelming, and BMO Critical Illness Insurance is designed to support you during these challenging times. If you are diagnosed with a covered critical illness such as cancer, a heart attack, coronary artery bypass surgery, or a stroke, this insurance can help cover your mortgage balance. You can select between 50% and 100% coverage, up to a maximum of $450,000, providing you with the financial flexibility to focus on your health and recovery.


BMO Disability Insurance:

In the event of an injury or covered illness that prevents you from working, BMO Disability Insurance steps in to help cover your mortgage payments. With the choice of 50% or 100% coverage of your regular mortgage payment, up to a maximum monthly amount of $3,000, you can concentrate on your well-being without worrying about your mortgage obligations. This insurance provides benefits for up to 24 months per disability, starting after a 30-day qualifying period. To be eligible, you must regularly work at least 30 hours per week, be a Canadian resident, and be a borrower or co-borrower on a mortgage between the ages of 18 and 65.


BMO Job Loss Insurance:


Involuntary job loss can be a source of significant financial stress. BMO Job Loss Insurance aims to alleviate this burden by covering your mortgage payments during such challenging times. You can choose between 50% and 100% coverage of your regular mortgage payment, up to a maximum monthly amount of $3,000. Job loss benefits are provided for up to 6 months per job loss, starting after a 60-day qualifying period. Eligibility criteria include continuous employment for 6 months with the same employer, possession of disability insurance, and age between 18 and 55 years old. Additionally, individuals eligible to receive Government of Canada Employment Insurance benefits (EI) can benefit from this coverage.


BMO Prepayment Charges:


To help you better manage your mortgage, BMO offers valuable information about prepayment charges. These charges may apply depending on the type of mortgage you choose. However, BMO provides options to pay off your mortgage faster without incurring prepayment charges:


Open Mortgages and Homeowner ReadiLine (revolving portion):


With these mortgage types, you have the flexibility to prepay all or part of your mortgage balance at any time without incurring prepayment charges.


Closed Mortgages and Homeowner ReadiLine (instalment portion):


BMO understands the importance of flexibility in prepaying your mortgage. That's why we offer flexible prepayment options that allow you to make additional payments towards your mortgage principal without incurring prepayment charges. By taking advantage of these options, you can potentially save thousands of dollars in interest over the life of your mortgage.


Prepayment charges apply in specific situations, including prepaying beyond your prepayment options, prepaying your entire mortgage before the end of the term, or refinancing or renewing your mortgage before the term ends. It's worth noting that prepayment charges differ for the smart fixed closed mortgage, where additional conditions apply.


The calculation of prepayment charges depends on the type of mortgage:


Variable Rate Closed Mortgage:

The prepayment charge equals three months' interest calculated at the applicable interest rate on the day of prepayment.


Fixed Rate Closed Mortgage:


For fixed-rate mortgages, the prepayment charge is the higher of three months' interest calculated at the fixed interest rate or an amount calculated using the interest rate differential (IRD). If the term exceeds five years, the prepayment charge is equal to three months' interest after the fifth year of the term.


Smart Fixed Closed Mortgage:


The prepayment charge calculation for a smart fixed closed mortgage is the same as for any fixed rate closed mortgage. However, within the first five years of the term, prepayment is restricted unless specific conditions are met.


Understanding prepayment charges helps you make informed decisions regarding your mortgage, ensuring you have the flexibility to manage your finances effectively.


By offering flexible payment options, mortgage protection insurance, and detailed information on prepayment charges, BMO strives to provide comprehensive support and assistance throughout your homeownership journey.


Rental Investment Mortgages


When it comes to purchasing a property for rental purposes instead of personal use, there are several factors to consider. If you choose to obtain a mortgage from BMO for this type of investment property where you won't be residing, it's important to have a minimum of 20% of the property's price available as a down payment.


Beyond the down payment, there are other crucial aspects to keep in mind. Firstly, the property's price should be assessed by comparing it to similar properties and evaluating its potential rental income. Additionally, selecting a property in a desirable location with attractive amenities and job opportunities nearby can make it easier to find suitable tenants and potentially increase the property's value over time. Lastly, it's essential to consider the costs associated with being a landlord, such as property management fees, insurance, utilities, and taxes. Taking all these factors into account will enable you to make an informed decision when purchasing an investment property.


BMO US Mortgages


BMO is dedicated to assisting individuals with their U.S. homeownership dreams, whether it involves a vacation home, primary residence, or investment property.


Obtaining a mortgage in the United States can be more complex than in Canada, but you don't have to navigate the process alone. Your Private Wealth professional in Canada can connect you with a BMO mortgage specialist who specializes in U.S. mortgages. In the U.S., our integrated team is specifically trained to make the process as seamless and stress-free as possible.


BMO offers both fixed and adjustable rate mortgages with various term options to cater to your specific needs.


Benefits of applying for a U.S. mortgage with BMO include:


Utilizing your Canadian credit history when applying for a U.S. mortgage.


Choosing between a Fixed Rate or Adjustable Rate Mortgage (ARM) to suit your preferences.


Collaborating with cross-border mortgage bankers who possess specialized knowledge in helping Canadians secure a U.S. mortgage.


Avoiding Foreign National premiums.


Having the flexibility to make additional lump sum payments or pay off your mortgage at any time without incurring penalties.


BMO Harris offers the BMO Cross-border Mortgage Program


For Canadian citizens seeking to purchase or refinance a home in the U.S., the mortgage process can be intricate. That's why cross-border home buyers require a bank that understands their unique needs. Our Gateway Program simplifies the mortgage process for Canadians who are buying or refinancing property in the U.S.


Key features of the BMO Cross-border Mortgage Program include:


Availability to Canadian citizens who bank with BMO.


Access to both conventional fixed and adjustable rate mortgages.


Loan amounts of up to $2 million (USD).


Eligibility for condos.


Open to self-employed applicants.


When applying for a cross-border mortgage in the United States, BMO accepts Canadian documents. Here is a list of documents you may need during the application process:


Canadian Documents:


Proof of Income:


T1 Income Tax and Benefit Return and Notice of Assessment.


Two years of T3 and T5 slips for investment income.


Two years of T4 slips and pay stubs for salaried employees.


Two years of business returns (T2) for self-employed individuals.


Proof of Citizenship and Identity:


Copy of passport and/or U.S. qualifying Visa for each borrower.


Social Insurance Number for each borrower.


Proof of Assets:


Account statements for the most recent two months for each account, including personal checking and savings accounts, line of credit (if using these funds to close on your new home), RSP, and investments/brokerage accounts (if using these funds to close on your new home).


It's important to note that all Canadian asset amounts will be converted into U.S dollars for the financial assessment.


Looking to access the equity in your U.S. home for your borrowing needs?


If you need to finance a significant purchase, consolidate higher interest debt, renovate your home, or simply want the reassurance of available funds in case of unexpected events, leveraging the equity in your U.S. home can be a valuable option.


BMO US Home Equity Line of Credit (HELOC) - A flexible borrowing option:


A Home Equity Line of Credit (HELOC) allows you to borrow a predetermined amount of money within a specified term. You can choose to use the funds all at once or in smaller portions as needed. Access the funds through checks or by transferring them to your BMO U.S. personal checking account.


The HELOC is available in 30-year terms, with 10 years to borrow and make interest-only payments, followed by 20 years to repay the fully-amortized loan. During the 10-year borrowing period, you only incur interest costs on the amount you actually borrow. This flexibility allows you to manage your expenses efficiently.


BMO Homeowner ReadiLine (HELOC) - Flexible home financing:


With BMO's Homeowner ReadiLine, you can borrow up to 80% of your home's value, which can be divided between a mortgage and a line of credit.


As you make payments towards the mortgage portion, the principal repayment increases the limit available on the line of credit portion. This gives you the freedom to use the line of credit for various purposes, such as home renovations, as the need arises. Moreover, if you only require the mortgage portion, BMO provides the option to pay back the borrowed amount through regular installment payments, similar to a standard mortgage, over a period of up to 30 years.


For the line of credit portion, you have the flexibility to withdraw funds based on your specific needs, and you won't be charged for the unused portion. Accessing funds is convenient, whether in person or through online or mobile banking. Since it is a line secured by your home, you can enjoy an interest rate that is typically lower than other options. Additionally, you can repay the funds withdrawn from the line of credit at any time without facing prepayment charges. This feature empowers you to manage your debt on your own terms. Furthermore, you have the option to convert your line of credit balances into an installment loan with fixed principal and interest payments.


BMO Cashback Mortgage:


If you are a new home buyer or looking to switch or refinance your existing mortgage to BMO, you may qualify for our cash back mortgage offer. To be eligible, you need to apply for a Fixed or Variable Rate Closed Term Mortgage or Homeowner ReadiLine® with a term of 3 years or longer between March 13 to June 30, 2023.


The cash back amount depends on the value of your mortgage, as follows:


$1,100 BMO Cashback for mortgages between $100,000 to $499,999


$2,100 BMO Cashback for mortgages between $500,000 to $749,999


$3,100 BMO Cashback for mortgages between $750,000 to $999,999


$4,200 BMO Cashback for mortgages exceeding $1,000,000


By taking advantage of this cash back offer, you can receive a financial boost to support your homeownership journey.

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