Why the Lowest Rate Isn’t Always the Best Mortgage Decision

Not sure what to do about a rate?

As more Canadians approach their mortgage renewal date, there’s growing anticipation around interest rate cuts from the Bank of Canada. Understandably, many homeowners are focused on one thing: locking in the lowest possible rate.

But here’s something you may not have considered—the lowest rate doesn’t always equal the lowest cost.

Let me share a quick story.

A client of mine was offered two mortgage options:

• a 5.04% 5-year fixed, and

• a 5.09% 5-year fixed.

  
  

They went with the 5.04% rate. On the surface, it seemed like the right decision—a slightly lower rate, slightly lower payment. But three years into the term, life happened. They needed to break their mortgage early, just like 60% of Canadian borrowers eventually do.

That’s when the reality of the fine print set in.

The penalty to break the 5.04% mortgage was over $14,000. Meanwhile, had they gone with the 5.09% option, the penalty would have been only $2,800.

That 0.05% “savings” cost them over $11,000 more.

This is a powerful reminder that when it comes to your mortgage, it’s not just about the rate—it’s about the total cost of borrowing. Unfortunately, many borrowers aren’t made aware of these details upfront.

What You Need to Look At Beyond the Rate

• Prepayment Privileges – Can you make lump-sum payments or increase your regular payments without penalty?

• Portability – Can you transfer your mortgage to a new property if you move? Not all mortgages are portable, and that’s a problem if your plans change.

• Penalties – How does the lender calculate penalties if you break your mortgage early? Is it a straightforward 3-month interest penalty, or a potentially costly Interest Rate Differential (IRD)?

• Flexibility – What happens if your income changes, you need to refinance, or want to access equity?

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When you sign a mortgage, you’re agreeing to a 30-year plan—even if you’re only committing to a 5-year term. That means the fine print really matters.

Why Work with an Unbiased Mortgage Broker

Unlike a bank, I’m not tied to one lender or product. My job is to help you compare multiple options and understand the true cost—not just the interest rate. I’ll walk you through how different lenders calculate penalties, whether a mortgage is portable, and how to match your mortgage to your short- and long-term goals.

Before you renew, refinance, or commit to a rate, let’s talk.

If you’d like a second opinion or want to fully understand what you’re signing, I’m here to help.

Ready to chat about your goals?Visit www.emilycallme.com to book a call.

Let’s make sure the mortgage you choose today still works for you tomorrow.