Bmo Mortgage Break Calculator

Use our BMO mortgage break calculator to determine how much you can save by taking a break from your mortgage payments. This tool helps you understand the financial impact of pausing your mortgage payments and how it affects your overall mortgage balance and interest costs.

What is a mortgage break?

A mortgage break, also known as a mortgage holiday or payment deferral, is a temporary suspension of mortgage payments. This can be beneficial for homeowners facing financial hardship or those looking to save money during a period of lower income.

BMO offers mortgage breaks to eligible customers, allowing them to pause their payments for a specified period without incurring penalties. This can provide financial relief while still allowing the homeowner to maintain ownership of their property.

How a mortgage break works

When you take a mortgage break, your lender will stop collecting interest on your mortgage balance. However, the principal amount remains the same, and you will continue to owe the full balance when the break period ends.

The length of the mortgage break varies depending on your lender's policies and your individual circumstances. BMO typically offers breaks ranging from 3 to 12 months.

Important Considerations

While a mortgage break can provide financial relief, it's important to understand the potential drawbacks:

Interest will continue to accrue during the break period
You may lose out on potential investment returns
Your credit score may be affected if you miss payments
You may need to refinance after the break to secure better rates

Using the BMO mortgage break calculator

Our calculator helps you estimate the potential savings from taking a mortgage break. Simply enter your current mortgage details and the length of the break you're considering, then click "Calculate" to see the results.

Calculation Formula

The calculator uses the following formula to estimate your savings:

Savings = (Monthly Payment × Break Duration) - (Interest Accrued × Break Duration)

Where:

Monthly Payment = Your current mortgage payment amount
Break Duration = Number of months you plan to take a break
Interest Accrued = Monthly interest rate × Current mortgage balance

Example calculations

Let's look at two scenarios to illustrate how the mortgage break calculator works.

Example 1: 6-month break on a $300,000 mortgage

Current mortgage details:

Mortgage balance: $300,000
Interest rate: 4.5%
Monthly payment: $1,500

If you take a 6-month break:

Total payments saved: $1,500 × 6 = $9,000
Interest accrued: ($300,000 × 0.045/12) × 6 ≈ $1,687.50
Net savings: $9,000 - $1,687.50 = $7,312.50

Example 2: 12-month break on a $400,000 mortgage

Current mortgage details:

Mortgage balance: $400,000
Interest rate: 5%
Monthly payment: $2,200

If you take a 12-month break:

Total payments saved: $2,200 × 12 = $26,400
Interest accrued: ($400,000 × 0.05/12) × 12 ≈ $2,000
Net savings: $26,400 - $2,000 = $24,400

Frequently Asked Questions

Can I take a mortgage break with any lender?

No, mortgage breaks are not universally available. They depend on your lender's policies and your individual financial situation. BMO offers mortgage breaks to eligible customers, but other lenders may have different requirements.

Will taking a mortgage break affect my credit score?

Yes, missing mortgage payments during a break period can negatively impact your credit score. It's important to communicate with your lender about your situation to minimize any potential damage to your credit.

Can I still make partial payments during a mortgage break?

Some lenders allow partial payments during a break period, which can help reduce the overall interest accrued. However, this depends on your lender's specific policies and your agreement with them.

What happens to my mortgage when the break ends?

When your mortgage break ends, you will need to resume making your regular payments. Your lender may require you to catch up on any missed payments, which could result in higher total interest costs.

Is a mortgage break right for me?

A mortgage break may be suitable if you're facing temporary financial hardship or if you're looking to save money during a period of lower income. However, it's important to carefully consider the potential drawbacks and consult with a financial advisor before making a decision.