News Releases

TORONTO, ONTARIO--(Marketwire - March 21, 2012) - As part of BMO Financial Group's ongoing commitment to financial literacy and 'Making Money Make Sense' for Canadians, BMO is releasing a financial tip every week in 2012.

BMO's Financial Tip of the Week: Stick to the One-Third Rule When Planning the Purchase of a Home

When assessing whether or not a new home is financially realistic, it's important to consider that housing costs - including mortgage payments, utilities and taxes - should not take up more than one-third of your total household income. Furthermore, servicing your overall debt should not account for more than 40 per cent of your income.

"The rule of thumb is total housing expenses should not consume more than one-third of total household income," said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. "If you can land safely within these parameters, then homeownership is an affordable and realistic option."

Ms. Parsons added that Canadians looking to buy a home should choose a shorter amortization, which will save homeowners thousands of dollars in interest rates over the life of the mortgage and ensure Canadians can begin building equity in their home sooner.

Currently, BMO offers a new 10-year mortgage at a great introductory rate of 3.99 per cent with a maximum 25-year amortization. It is modeled after our popular 5-year maximum 25-year amortization mortgage at 2.99 per cent. Both are available to new and existing customers; the offers are available until March 28, 2012.

For those looking to buy a home, try BMO's Mortgage Calculator to complete an affordability assessment and determine how much you can realistically afford: http://www.bmo.com/calculators/hmcia/index.jsp?lang=en.

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $538 billion as at January 31, 2012, and more than 47,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.