How to Compare Mortgage Offers
When comparing mortgages, it's tempting to focus only on the monthly payment — but a lower payment doesn't always mean a lower total cost. A longer amortization period reduces your payment but increases total interest paid over the life of the loan. This calculator shows you all the numbers so you can make an informed decision.
Key Factors When Comparing Mortgages
- Interest rate: Even 0.25% difference on a $500,000 mortgage saves thousands over 25 years.
- Amortization period: A 30-year vs 25-year amortization lowers monthly payments but adds years of interest.
- Total interest paid: The truest measure of a mortgage's cost over its full life.
- 5-year cost: Useful if you plan to refinance or sell within the next term.
- Monthly payment: Must fit your monthly cash flow — no comparison tool can override your budget.
Fixed vs Variable Rate Mortgages in Canada
Fixed rate mortgages lock your rate for the term (typically 5 years), giving you payment certainty. Variable rate mortgages fluctuate with the prime rate and have historically averaged lower costs over time, but carry rate risk. When comparing a fixed vs variable offer, consider what scenario looks better if rates rise 1–2% from today.
Comparing More Than Just the Rate
The lowest advertised rate isn't always the best overall deal. Lenders can offset a low rate with tighter prepayment privileges, a steeper penalty for breaking the mortgage early, or a shorter rate-hold period while you shop. When two offers are close on rate, it's worth asking each lender about: how much extra you can pay per year without penalty, whether the mortgage is portable to a new property, and exactly how the early-break penalty is calculated — see our Prepayment Penalty Calculator to estimate that cost for each offer.
Rate Hold Periods
Most lenders let you lock in, or "hold," a quoted rate for 30–120 days while you shop for a home or wait to close. If rates drop during that window, most lenders will honour the lower rate; if rates rise, you keep the rate you held. A longer hold period is worth more when rates are trending upward, so factor hold length into your comparison alongside the rate itself.