Pay your mortgage faster

Increase Mortgage Payments and Shorten Amortization

You can choose to increase the amount of your regular mortgage payment (principal and interest) by up to 20% (10% if you have a BMO Smart Fixed Mortgage) without added charge. You can do this once in every calendar year. Paying more each month shortens your amortization and can significantly reduce your interest costs over time.

Prepayment Options

A mortgage prepayment charge will apply on a closed mortgage when you:

• Prepay more than your prepayment options allow
• Prepay your entire mortgage prior to the end of your mortgage term, including if you prepay your mortgage to transfer to another financial institution^†
• Refinance or renew your mortgage prior to the end of your mortgage term

Prepayment charges recover some of the losses we incur as a result of earlier mortgage repayment.

How Charges Are Calculated

For variable rate closed mortgages, the prepayment charge is three months' interest based on the rate on the day of prepayment. With fixed rate closed mortgages the prepayment charge is the higher of three months' interest calculated at the applicable fixed interest rate or an amount calculated using interest rate differential (IRD). If the term is greater than five years, and you prepay after the fifth year of the term, the prepayment charge is equal to three months' interest.

The interest rate differential is the difference between your existing mortgage interest rate and the current posted rate charged for the mortgage similar to yours for the remaining term of the mortgage, taking into account any rate discount you may have received.

If you prepay any closed mortgage within the last three months of the term, the prepayment charge is equal to the interest on the amount you are prepaying, calculated at the interest rate applicable on the date of prepayment. If you want to prepay a BMO Smart Fixed Mortgage within the last three months of the initial five year term, you must also be selling your property or refinancing into another BMO mortgage. Use our mortgage Prepayment Calculator to figure out how much you'll need to prepay.

Reduce/Avoid Mortgage Prepayment Charges

Portable Mortgage Option: If you want to refinance your mortgage or purchase another home without paying a prepayment charge, 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. If you need to increase your mortgage amount, your 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. We will release you from any personal liability on the mortgage if your purchaser meets our usual credit requirements and if your lawyer has completed the necessary paperwork. Note: This option is not available for Homeowner ReadiLine^®.

Use your prepayment options before paying your mortgage in full: If you intend to pay off your mortgage prior to the end of the mortgage term, use your allowable mortgage prepayment options to reduce prepayment charges before requesting a payoff statement.

Consider an open mortgage term: If you intend to sell the property or refinance within a short period of time choose an open mortgage term instead of a closed term, if this makes financial sense given applicable interest rates. This will help you avoid prepayment charges.

Pay down your mortgage at renewal time: You can make any lump sum prepayment amount at the end of your mortgage term and renew without a prepayment charge.