# BMO Smart Fixed Mortgage



## sprocket1200 (Aug 21, 2009)

Hey gang,

Just wanted some help from the experts.

I am in a BMO Smart Fixed mortgage and cannot pay it out so that I can consolidate my accounts with another bank. Is there any way out of this beast? I am told I cannot have it transferred to another lender. What options do you suggest I pursue?

Any help appreciated!

Cheers,
Sprocket


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## OnlyMyOpinion (Sep 1, 2013)

Oops. Got it for the good rate, just stay with it. Or, if getting out of the mortgage is that important sell the house.


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## nobleea (Oct 11, 2013)

You can always get out of a mortgage. Depending on how far you are in to your term and how much the principal was, your penalty for breaking it could be 3-25K. Hardly seems worth it if you're only doing it for administration purposes to consolidate at a different bank. Perhaps if you can get a much lower rate somewhere else, it might be worth it.

Just change when the term is up.


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## Mortgage u/w (Feb 6, 2014)

Guess you are realizing it was not that 'smart' after all.
I keep repeating this - rates are not the most important factor in a mortgage! You are not buying oranges where you will save a couple of pennies from one grocery store to another.

Unfortunately, the only way out is to pay the penalty for the remaining term. Obtain the penalty amount and then speak to a competent mortgage broker to have them calculate the worthiness of switching.

If your only reason is to change institution, it will definitely not be worth it. But if you need to increase your mortgage and/or obtain a much better rate, then the penalty may be offset by the interest differential. Rare these days, but possible none-the-less.

Lesson here - shop for benefits in a mortgage NOT interest rates. Not all mortgages are the same and will fit each individual differently.


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## Ag Driver (Dec 13, 2012)

Mortgage u/w said:


> Lesson here - shop for benefits in a mortgage NOT interest rates. Not all mortgages are the same and will fit each individual differently.


In your opinion, what are the most benificial attributes of a good mortgage? 

I have the option to double down my payments at any time, directly to the principle. I also have the option to throw down 10% on the principle at the end of each year. I thought these were some nice benifits.


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## Mortgage u/w (Feb 6, 2014)

Ag Driver said:


> In your opinion, what are the most benificial attributes of a good mortgage?
> 
> I have the option to double down my payments at any time, directly to the principle. I also have the option to throw down 10% on the principle at the end of each year. I thought these were some nice benifits.


There is no good or bad mortgage. Each mortgage should be catered to your individual needs. There are several benefits you can take advantage of such as the ones you listed. If prepayment privileges are important for you, then you could have found mortgages which allow you a combination of up to 20% annual pre-payment, 20% payment increase and double-up payment. 

Other prepayment benefits can include penalty calculations. Most banks have horrendous calculation methods. Mono-line lenders or virtual lenders tend to have standard or more beneficial calculations. This can make a difference of thousands of dollars. 

As in the example above, the 'smart' rate with BMO attracts the 'rate shopper' but the loan has pre-payment restrictions. Only way out is to pay a penalty - sometimes a hefty one. Blend rates are another advantage where you can blend your penalty into a new rate with a new term. This is where variable rate terms are the most advantageous. Regardless what happens and when you break the mortgage, you always pay 3 mth penalty.

Collateral mortgages are more and more common these days especially for HELOCs. This restricts you from 'switching' your mortgage at maturity to another lender with no legal fees. If you are not a rate shopper or a bank hopper, then this is not much of a burden to have. 

Ask questions to your mortgage specialist and be as clear as possible with your future plans. The common terms are 5 years and although its tough to predict what will happen in 5 years time, stats say its more than certain you will break your mortgage before the end of your term. The national average is 2 years! Think about that next time you lock in a 5 year mortgage.


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