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BMO Bank of Montreal Introduces New Line of Credit – the Only Borrowing Solution You May Ever Need  

BMO Bank of Montreal today announced the launch of an innovative line of credit that effectively provides homeowners with a convenient 'one-stop-shop' approach to borrowing. The BMO Bank of Montreal Homeowner ReadiLine allows homeowners to access up to 75% of the value of their home to finance all of their personal borrowing needs.

The BMO Bank of Montreal Homeowner ReadiLine, provides a single borrowing plan that includes revolving portions and installment portions under one credit limit, secured by the equity in the borrower's home.

Unique multiple revolving facilities under a single plan give borrowers the ability to effectively split their line of credit into separate accounts, each carrying their own tailored repayment plans and related interest rates.

The revolving portions float at prime (currently 3.75%) and provide customers with the option of interest-only payments.

The installment portion can be set at a fixed or variable rate and allows a maximum amortization of 25 years. Rates are based on residential mortgage rates.

A combination of floating and fixed rates may be ideal for those looking to minimize overall interest costs while protecting themselves against interest rate fluctuations.

BMO Homeowner ReadiLine customers can keep track of their purchases, payments and balances online or through easy-to-read monthly and annual statements for each of the credit facilities that they set up under the BMO Homeowner ReadiLine.

"Whether you're looking to renovate, finance a child's education, purchase a vacation property or borrow to make an investment, our new Homeowner ReadiLine gives you access to the equity you've built in your home, all this at preferred rates", said Maria Racanelli, vice-president, BMO Bank of Montreal. "It can be the best of both worlds in that it combines the convenience and flexibility of a line of credit with the security and interest rates of a conventional mortgage."

The ability to break up the overall line of credit into accounts with different terms and repayment arrangements is particularly attractive to people who are borrowing to invest. Because Homeowner ReadiLine customers can segregate multiple revolving facilities under a single plan, it means they can adopt tax-effective payment strategies, such as making tax-deductible interest-only payments on one facility, while directing more of their principal and interest payments to other non-deductible borrowing within the same plan as recommended by their financial advisor or accountant.

"What is unique is that customers can customize their repayment schedules and interest rate strategies in a way that works for them," said Racanelli. "The BMO Homeowner ReadiLine allows you to pay down your balance quickly and still keep a reserve so that you remain financially prepared to take advantage of opportunities or deal with unexpected life events," she said.

Racanelli explained that borrowers can consolidate existing loans, mortgages and credit card balances into one borrowing plan at a significantly lower interest rate, freeing up cash that might otherwise have been eaten up by higher interest costs.

"Borrowers will also enjoy the control and convenience of a single borrowing plan that can be adapted to changing needs," she added. "You can pay off your loan and redraw when you need to renovate, when you need to pay for your kids education, when you want to borrow to invest, when you want to take your vacation. It's the only personal borrowing facility you may ever need. It's a mortgage, it's a line of credit, it's a personal loan, whatever you need, it's all in one."

Borrowers can access their BMO Homeowner ReadiLine easily using provided cheques or a credit card. Up to 475 AIR MILES reward miles can be earned upon set-up and AIR MILES reward miles will continue to be earned on purchases applied to the BMO Homeowner ReadiLine when those purchases are made with an AIR MILES MasterCard Access Card.

With a BMO Homeowner ReadiLine, homeowners can borrow up to 75% of the value of their home whenever they need to. As they pay down their balance, their borrowing reserve grows, giving them access to these funds. To qualify, borrowers must have a down payment or equity in their home of 25% or more.

Canadians embrace lines of credit
Some interesting findings from Clayton Research/Ipsos-Reid, The FIRM Household Borrowing Survey, March 2004:

  • Since 1997 there has been a shift from using personal loans to lines of credit and, for most purposes of borrowing, lines of credit are now used more often than loans.
    • More than half of all households surveyed report they have a line of credit with 2/3 of those with a line of credit reporting new borrowing with lines of credit in the past year.
  • Homeowners with mortgages typically have other borrowing needs. Last year, about 6 in 10 homeowners with mortgages also had new borrowing with lines of credit or loans.
  • Debt consolidation is one of the top uses of lines of credit, along with daily spending, renovations and purchasing a vehicle.
  • Most homeowners set up a line of credit without an immediate need to borrow - they want to have a borrowing facility in place that they can quickly and easily access when they need to.

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