Bank of Montreal (BMO) provides a flexible financial product known as BMO Line of Credit. It lends money to the individuals up to a certain limit.
Your financial situation decides the amount you can borrow from the BMO.
Traditional loans are slightly different from the Line of Credit. In traditional loans, people pay interest on the amount they’ve obtained. But, in the BMO Line of Credit, the amount that an individual has used, they only have to pay for that specific amount.
What are the types of BMO Line of Credit?
There are a few types of BMO Lines of Credit, each type provides different financial assistance:-
- Student Line of Credit: It is formed for the students to manage their educational expenses. It has favourable credit interest rates and reimbursement of the amount.
- Home Equity Line of Credit: It is provided on the equity of your home for and has lower interest rates. It is used for large expenses.
- Personal Line of Credit: It is used for personal expenses, or in emergency purposes.
How does BMO set its credit interest rates?
BMO credit interest rate is impacted by some factors:
- Prime Rate:- BMO’s credit interest rate is fixed with the prime rate, which is the interest rate that banks charge to their most trustworthy customers. If the prime rate changes, the credit rate also fluctuates.
- Credit score :- Your history of credit score also plays a vital role in deciding your BMO’s interest rates.
- Kinds of Line of Credit:- Different Lines of credit have different interest rates. So, based on the type of credit you’re using, your interest rate gets decided by it.
How can I Access and Pay BMO Line of Credit Canada?
If you want to get a BMO Line of Credit, then you need to book an appointment with the representative. The representative will check your documents and your credit history.
According to your details, they will offer a plan to you which includes how much credit you are going to receive. After the approval of your application, access your credit by visiting the nearest branch or by accessing the credit online.
To pay BMO Line of Credit:-
- Check your eligibility. It includes your credit score, balanced income and your residential status.
- Submit your necessary documents that include your personal information and credit history details.
You will get a notification from the bank once your payment is processed. Usually, it takes 24 hours.
Merits and Demerits of BMO Line of Credit
Advantages
- BMO Line of Credit provides lower interest rates in comparison to others.
- You can access your fund whenever you need it, which makes it really flexible and handy.
- It also provides financial security as you can take out the amount whenever needed.
Disadvantages
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- Variable interest rates lead to fluctuation in your interest amount as it is tied to the prime rate.
- There is also a risk of over-borrowing due to ease of access, if not managed properly.
- Fees and charges included with your Line of credit also adds up as a disadvantage.
FAQs for BMO Line of Credit Interest Rate
BMO provides both fixed and variable interest rates for its Line of Credit.
Yes, during an emergency you can access your money from the BMO Line of Credit.
The current interest rate of BMO is 7%. However, the interest rate varies according to the type of Line of Credit.
Riya Claire is the Editor-in-Chief of the East Hampton Chamber Portal. She holds a degree in Mass Communication, an MBA in Finance, and a diploma in HR, making her a versatile professional for an online portal