Here's what many homebuyers and owners are overlooking in their mortgage hunt
Mortgage rates in Canada are showing notable differences depending on the lender, loan-to-value ratio, and term length. But when it comes to choosing a mortgage, there's more to consider than just the rate – and taking terms and conditions into consideration is something many homebuyers often overlook, according to licensed mortgage broker and LowestRates.ca expert Leah Zlatkin.
That can lead to costly surprises, Zlatkin said in a new analysis, when the mortgage gets underway.
“Mortgages are complex financial agreements, and it’s not always clear what you’re agreeing to,” Zlatkin said.
“Beyond the interest rate, it’s important to look at the overall structure, potential fees, and penalties that could become very expensive if your plans change. Knowing what to watch for can help you avoid costly surprises, especially with so many renewals happening right now.”
Zlatkin recommends homebuyers focus on four key areas before signing a mortgage:
- Look beyond the rate. Low rates may have restrictions, such as limited prepayments or high early repayment penalties.
- Understand all additional charges. Buyers should request a full breakdown of fees – including administrative, appraisal, and legal costs – to prevent unexpected expenses.
- Know how penalties are calculated. Early repayment, refinancing, or moving can result in penalties worth tens of thousands of dollars.
- Consider long-term flexibility. Features like portability, ease of refinancing, and prepayment privileges can save money over time, even with a slightly higher rate.
With multiple lenders offering similar rates but different conditions, Zlatkin says the most cost-effective mortgage is often the one that balances rate, flexibility, and long-term security.
What's more, recent weeks have seen little relief for homebuyers, or owners renewing their morgage, on the rate front. The Bank of Canada has left its benchmark rate unchanged over the summer, meaning the interest rate on variable mortgages has remained unchanged, while fixed rates have stayed stubbornly high thanks to still-high five-year Government of Canada bond yields.
What are your thoughts on the recent data? Share your insights in the comments below.
