Lowering Your Overall Cost of Borrowing
Why the lowest rate is not always the cheapest mortgage.
The quick version
Your goal is the mortgage that costs you the least overall, not just the lowest rate.
Penalties are often the biggest hidden cost.
Features like prepayments, portability and how the mortgage is registered matter.
A rock-bottom rate can come with restrictions that cost you thousands later.
Want to know what your mortgage will really cost? Book a call and I will walk you through the fine print.
A few terms to know
Amortization: the total time to pay off your mortgage, often 25 years (sometimes 30).
Term: how long your rate and conditions are locked in, anywhere from 6 months to 10 years. Most people renew several times.
Features: the rules that come with your mortgage, like penalties and prepayment options.
Questions that lower your cost
1. How long will I stay in this home?
This helps choose the right term.
2. Might I move for work or family?
If so, portability (taking your mortgage with you) could matter.
3. What is the penalty if I break my mortgage early?
This is often the biggest factor in your total cost. Many Canadians break their mortgage before the term ends.
4. How does the lender calculate its penalty?
Fixed-rate penalties are often based on the interest rate differential (IRD), and every lender calculates it differently. Some are far more expensive than others. This is very hard to figure out on your own, so let me help.
5. What are my prepayment privileges?
Extra payments go straight to your principal. The more flexibility you have, the faster you can be mortgage-free.
6. How is the mortgage registered?
A standard charge is usually easier to move to another lender at renewal. A collateral charge can offer flexibility but may make switching harder or cost legal fees.
7. Which type fits me?
Fixed, variable, a home equity line of credit (HELOC) or, for homeowners 55+, a reverse mortgage. Each has pros and cons.
8. Can I put more down?
A bigger down payment can lower or even eliminate your mortgage default insurance premium, saving you thousands.
The real cost of a "cheap" rate
A rate that is 0.10% lower might save you a few dollars a month. But if that mortgage is restrictive and you need to break it halfway through, the penalty could cost you thousands or even tens of thousands. That wipes out any savings.
Let us find your lowest true cost
I will compare the fine print across lenders and match the mortgage to your life plans, so you save money now and later. Book a call anytime.
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