It’s simple to concentrate only on the interest rate when looking for a mortgage in Canada. Reduced rates equate to reduced monthly payments, don’t they?  Not necessarily. While interest rate plays a significant role, it’s far from the only factor that determines how good a mortgage deal truly is. From prepayment privileges and penalties to amortization flexibility and portability, the fine print can dramatically affect your long-term costs and financial flexibility.

This blog will walk you through the essential elements to consider when comparing mortgage offers, so you can make a confident, informed decision, not just a quick one.

• Interest Rate Types: Fixed vs. Variable

It’s critical to comprehend the distinction between fixed and variable rates before comparing them:

• Fixed-rate mortgages offer predictable payments by locking in your interest rate for the duration of the loan. 
• Variable-rate mortgages fluctuate with the lender’s prime rate. Although they might begin cheaper than fixed rates, these carry a higher risk in the event that rates rise.

When comparing offers, be sure you’re comparing similar rate types over the same term (e.g., a 5-year fixed vs. a 5-year variable rate).

• Mortgage Term and Amortization

• Term: This is the duration of your existing mortgage, which is typically one to five years. Your mortgage will then need to be renewed, transferred, or paid off.
• Amortization: The total amount of time (usually 25 to 30 years) needed to pay off your mortgage.

A longer amortization lowers monthly payments but increases total interest paid. Some lenders offer flexible amortization schedules with lump-sum payments to reduce debt faster.

Tip: Be cautious when comparing two mortgages with different amortization periods. One may appear more affordable monthly, but it costs more over time.

• Prepayment Privileges

With prepayment rights, you can pay off your mortgage more quickly and penalty-free. These can make a big difference in interest savings.

Look for:

• Lump-sum payments: Some lenders allow you to pay 10% to 20% of your original loan amount annually without penalty.
• Increased regular payments: You may be able to boost your regular payments by a fixed percentage.

Not all mortgages include generous prepayment options, and some restrict them heavily. When comparing offers, ask how much flexibility you have to make additional payments if your income increases or you receive a financial windfall.

• Portability

If you think you might move before your mortgage term ends, portability matters. You can move your current mortgage (and rate) to a new home with no penalties if you have a movable mortgage.

Not all lenders allow porting, or they may impose strict conditions like requiring the new property to close on the same day as the sale of your existing home.

• Penalties for Breaking the Mortgage

Life is unpredictable—you might sell your home, refinance, or need to break your mortgage early. That’s when prepayment penalties come into play.

• Fixed-rate mortgages usually have higher penalties, often calculated as the Interest Rate Differential (IRD).
• Variable-rate mortgages typically carry smaller penalties—commonly three months’ interest.

Always ask the lender for a sample penalty calculation based on a hypothetical early break, so you can understand the potential risk.

• Mortgage Default Insurance Requirements

If your down payment is less than 20%, you’ll need mortgage default insurance (from CMHC, Sagen, or Canada Guaranty). Although the lender is protected by this insurance, you bear the expense.

• The premium is added to your mortgage and is computed as a percentage of the loan. 
• Some lenders allow flexibility in how this is paid, or offer better rates based on insurance provider relationships.

Compare not only the base interest rate but also whether the offer includes default insurance and how much it adds to your total loan amount.

• Cashback Offers and Fees

Some lenders offer cashback mortgages, giving you a lump sum at closing. This can be helpful for covering legal fees or moving costs, but these often come with higher interest rates or strict repayment rules.

Also, watch out for:

• Appraisal fees
• Legal fees
• Discharge or setup fees
• Administrative costs

Ask each lender for a full breakdown of upfront and ongoing costs, not just the rate.

• Customer Service and Support

A mortgage is a long-term relationship. Comparing lenders should include how accessible, flexible, and supportive their service is. Key questions to ask:

• Is your broker or rep responsive and transparent?
• Does the lender allow digital signing or online portals?
• Are they known for accommodating renewals or offering early renewal options?

Even the best rate isn’t worth the headache of poor service or unexpected complications.

Comparing mortgage offers in Canada requires more than just looking at who offers the lowest interest rate. From prepayment options and penalties to terms, fees, and service quality, there are many factors that impact your real cost and long-term satisfaction.

Before signing, ask your mortgage broker or lender to walk you through all the details—not just the rate. Taking the time to understand the full picture can save you thousands and give you the flexibility to adapt as life changes.

If you’re ready to compare offers or need help understanding your options, reach out to a qualified mortgage broker who can guide you through the process with clarity and confidence.