A mortgage comparison usually starts and ends with one number, the rate. That is the right first filter, because a rate gap compounds on a six-figure balance every month. It is the wrong last filter. Two offers at, say, 4.19% and 4.09% are not equivalent if the cheaper one caps lump-sum payments at 10% a year, registers a collateral charge that costs money to move, or carries a variable rate that stops paying down principal when the rate rises. Those terms do not appear in a payment calculator, and they often decide the real cost.
This guide sets out what to compare after the rate and why, using the Financial Consumer Agency of Canada's (FCAC) mortgage pages, the Bank of Canada, and two lender pages, all read on 2026-10-07. It assumes you know what a term and an amortization are, which are explained in the site's stress test post, and it does not recalculate penalties, which have their own mortgage penalty calculator. For the rate-only arithmetic, use the mortgage comparison calculator first and come back here for everything it cannot see. All amounts are Canadian dollars (CAD), and the payments use Canadian semi-annual compounding on a 25-year amortization.
What a rate-only comparison leaves out
A rate comparison answers one question: if I keep this mortgage to the end of the term and change nothing, which costs less? Most borrowers do not keep a mortgage unchanged. Many sell, refinance, switch lenders at renewal, or pay a lump sum when a bonus or a tax refund arrives. Each of those events is governed by a clause, and the clause has a price. The list below is the set that matters, and each item has its own section.
- Rate type: fixed, or variable, and for a variable rate whether the payment moves with the rate.
- Prepayment privileges: how much extra you may pay each year without a charge, and whether you may raise the regular payment.
- Charge type: a standard charge secures only the mortgage, while a collateral charge can secure more and costs more to move.
- Cash back: an up-front payment from the lender that is paid for through the rate.
- Portability: whether the mortgage can move to the next home without a penalty.
- Penalty method and disclosure: how the charge for leaving early is calculated and how the lender must show it to you.
Fixed or variable: what happens to the payment
FCAC describes the basic difference plainly. A fixed rate stays the same for the whole term and so do the payments. A variable rate may rise and fall during the term. The detail that matters in a comparison is the kind of variable mortgage you are being offered, because FCAC warns that where the payment stays fixed while the rate moves, a larger share of each payment goes to interest when rates rise. In an extreme case none of the payment reduces the principal, and FCAC notes the total amount owed can increase, which is known as negative amortization.
A worked example shows the size of the effect. Take a C$500,000 mortgage at a 4.00% variable rate over 25 years, which gives a payment of about C$2,630 a month on the semi-annual convention used here. If the rate climbs and the payment is fixed, the interest owed each month rises while the payment does not. At 6.00% the first month's interest on that balance is about C$2,469, so the payment still covers it with C$161 going to principal. At 7.00% the interest is about C$2,875, which is more than the whole payment. The rate at which the payment is exactly used up by interest is just under 6.4% (about 6.40%) on the opening balance, and it is lower on a larger balance and higher as the balance falls.
| Variable rate | Interest in the first month | Left over for principal |
|---|---|---|
| 4.00% | C$1,653 | C$977 |
| 6.00% | C$2,469 | C$161 |
| 7.00% | C$2,875 | None; the balance grows by about C$245 |
| 8.00% | C$3,279 | None; the balance grows by about C$649 |
Illustrative arithmetic on the opening balance, using the semi-annual compounding convention. Real contracts differ: some lenders raise the payment when the rate moves, and some set a limit at which they require you to act. Read the contract wording for what happens at that point.
This is the first question to ask about a variable offer: does the payment change when the rate changes, or does it stay put while the split between interest and principal changes? Both exist in the market. A payment that follows the rate is easier to understand and avoids the growing-balance problem. A payment that stays fixed is easier to budget, but it hides the risk until the rate has moved a long way. Ask what the lender does when the payment no longer covers the interest, and whether the answer is written into the contract.
The Bank of Canada's policy rate was 2.25% at its most recent announcement on 2026-09-02, with no change, and its next scheduled decision is on 2026-10-28. Variable rates generally move in the direction of the policy rate, so a variable offer is a bet on where that rate goes over the term. The Bank's 2026 Financial Stability Report sorts the market by payment type. It estimates that about 14% of outstanding mortgages are variable-payment mortgages or shorter-term fixed-payment mortgages taken out after rates rose in 2022 and 2023, and that these borrowers will on average see no change in payment at renewal. About 12% are pandemic-era fixed-payment mortgages whose borrowers will see payments rise by about 15%. The point for a comparison is that the choice of payment type shows up at renewal as well as during the term.
A worked comparison: a rate gap and a cash-back offer
The following offers are hypothetical, chosen to show how the arithmetic works. All three are five-year fixed terms on C$500,000 over a 25-year amortization.
| Offer | Rate | Monthly payment | Interest over 5 years | Balance at end of term |
|---|---|---|---|---|
| A | 4.19% | C$2,681.85 | C$97,610 | C$436,699 |
| B | 4.09% | C$2,654.55 | C$95,223 | C$435,949 |
| C (3% cash back) | 4.44% | C$2,750.71 | C$103,587 | C$438,545 |
Calculated with Canadian semi-annual compounding. Interest over five years is total payments minus the principal repaid. Offers A and B differ by 0.10 percentage points; offer C is priced 0.25 points above A in exchange for cash back.
Offer B beats offer A by C$27.30 a month and by about C$2,387 of interest over five years, with a balance C$750 lower at the end. That is the number a rate calculator shows. Offer C is where the comparison becomes less obvious. A 3% cash back on C$500,000 is C$15,000 in hand on closing. Its extra 0.25 points of rate cost about C$5,977 more than offer A over the five years, including the larger balance left at the end. On paper, then, a borrower who holds the mortgage to term is ahead by roughly C$9,000.
FCAC's warning is the reason that is not the end of the analysis. It says cash back typically comes with a higher interest rate and may end up costing you more than the cash you receive. The paper advantage depends on keeping the mortgage for the full term. If you sell or refinance in year two, you have paid the higher rate for less time, but you may also owe something back to the lender, and the terms for that are in the offer, not in the rate. Before you count the cash as a gain, get the repayment terms in writing, and check them against your own plans for how long you will stay. If the answer is under five years, test the offer using the early-exit cost as well as the rate.
Prepayment privileges: the limit you may not notice
A closed mortgage lets you pay extra without a charge up to a limit, and the limit is set by the lender. FCAC says the privileges vary from lender to lender and that not all lenders allow them. An open mortgage lets you prepay without a charge (RBC sets a C$500 minimum per prepayment) and carries a higher rate. Two of the large banks show how far apart closed limits can be.
| Lender | Lump-sum limit, closed mortgage | Payment increases | Open mortgage |
|---|---|---|---|
| RBC | Up to 10% of the original principal once in every 12-month period | Double Up: you may double your regular principal and interest payment | Prepayments of C$500 or more, as often as you like |
| TD | Up to 15% of the original amount per year | Total increases may not exceed 100% of the original principal and interest payment | Unlimited lump-sum payments |
On a C$500,000 mortgage, 10% is C$50,000 a year and 15% is C$75,000. Check your own contract; limits differ by product, and a lender can change its page.
Whether a C$25,000 difference in the annual limit matters depends on your plans. A household that expects to receive an inheritance, sell another property or make steady extra payments can use the larger limit. A household that will never prepay more than a few thousand dollars loses nothing by accepting the smaller one. The mistake is to learn the limit when you have the money and the contract says no. For how an extra payment shortens the amortization, run it through the mortgage payoff calculator, which includes a lump-sum privilege input.
What the penalty is, and what you can make the lender show you
If you pay more than the limit, break the contract, move the mortgage to another lender before the term ends, or pay it off early, the lender may charge a prepayment penalty. How the charge is calculated is covered by the mortgage penalty calculator and is not repeated here. What belongs in a comparison is disclosure. The Code of Conduct for Federally Regulated Financial Institutions on mortgage prepayment information, which FCAC oversees, requires lenders to explain how they pick the comparison rate used in an interest rate differential calculation and where you can find it, to post a calculator on their public website, to send annual information on prepayment privileges and the dollar amount you can prepay without a charge, and to give you a written statement of the charge when you tell them you intend to prepay. Ask for the formula before you sign, and ask where the comparison rate is published.
Standard charge or collateral charge
When you take a mortgage, the lender registers a charge against the property at the land registry. FCAC explains the two forms. A standard charge secures only the mortgage and is registered for the amount of the mortgage. A collateral charge lets the lender secure several loans, such as a mortgage and a line of credit, and the lender can register it for more than the mortgage amount, which allows you to borrow more later without a new registration. That flexibility is a feature if you intend to use it. It is a cost if you intend to leave.
The cost shows up when you switch lenders. FCAC says that if your mortgage is registered as a collateral charge and you want to move, you may have to pay fees that cover removing the charge from your existing mortgage and registering the new one, and that you must meet certain criteria to remove it: you must repay in full or transfer to the new lender every loan agreement the charge secures, including car loans and lines of credit. So a borrower with a collateral charge, a line of credit and a car loan at the same lender cannot leave by moving the mortgage alone.
FCAC's guidance on switching at renewal lists the usual costs: setup fees with the new lender, which may include discharge, registration, transfer or assignment fees, an appraisal if one is required, and administration charges. It suggests asking whether the new lender will pay some or all of them. Its discharge page adds figures: lenders may charge a discharge fee, which is regulated in some provinces and territories and where unregulated typically runs from nothing to C$400, and a lawyer, notary or commissioner of oaths typically costs C$400 to C$2,500. The process differs by province or territory, since it runs through the land title registry.
| Item | Range | Paid to |
|---|---|---|
| Discharge fee (where not regulated) | C$0 to C$400 | Existing lender |
| Legal, notary or commissioner of oaths | C$400 to C$2,500 | Professional you hire |
| Appraisal, if the new lender requires one | Not stated by FCAC | Appraiser |
| Prepayment penalty, if the term has not ended | See your contract and the penalty calculator | Existing lender |
Ranges are FCAC's typical figures from the mortgage discharge page, last updated 2025-09-25. The penalty is outside these ranges and is usually the largest item mid-term. At renewal, there is no penalty and the fees are the main cost.
For a straight comparison, ask each lender three questions: is the charge standard or collateral, what does it cost to move at renewal, and will you cover the legal and appraisal costs if I switch to you. A lender that agrees to pay those costs has effectively reduced its rate by the amount of the fees, which belongs in the comparison. At renewal the same questions apply from the other side, and the mortgage renewal calculator shows what a switch has to save to be worth the fees.
Portability: taking the mortgage with you
A portable mortgage can be transferred to a new property, keeping the balance, rate and terms, and FCAC says this lets you avoid a prepayment penalty. For a borrower who might move before the term ends, portability can be worth more than a small rate gap, because the alternative is paying a charge to leave a mortgage you would otherwise have kept.
A few cautions apply to portability. The new property has to be approved by the lender, so the right to port is not a right to borrow against any home. If the new home costs more, ask what rate applies to the extra borrowing and whether it is blended with your existing rate. The porting window, the time allowed between selling one home and buying the next, is set by the lender and is a clause to read. FCAC's page does not set these limits, so they are questions for the lender. A mortgage that is not portable, or that has narrow porting terms, should be priced as if the penalty will be paid if you sell.
A comparison scorecard
The table below turns the clauses into questions you can put to two lenders. Fill in both columns, and price anything that differs.
| Clause | What to ask | Why it matters |
|---|---|---|
| Rate type | Fixed or variable? If variable, does the payment change with the rate? | A fixed payment on a variable rate can stop reducing principal when rates rise |
| Term and rate | What are the rate and term, and is the rate guaranteed until closing? | The base of the comparison, and the one a calculator handles |
| Lump-sum limit | What percentage of the original principal can I prepay each year, and from what date? | RBC and TD show a 10% to 15% spread |
| Payment increase | Can I raise the regular payment, and by how much? | TD lists a limit of 100% of the original payment |
| Penalty | Is it three months' interest or the interest rate differential, and where is the comparison rate published? | The FCAC-overseen prepayment code requires disclosure of the method |
| Charge type | Is the charge standard or collateral? Which of my other debts does it secure? | A collateral charge can cost more to move and ties other loans to the mortgage |
| Switching costs | Will you pay the legal, appraisal and discharge costs if I transfer? | FCAC suggests asking, and it moves the effective rate |
| Cash back | What do I owe if I break the mortgage early, and how much higher is the rate? | FCAC warns that cash back can cost more than it pays |
| Portability | Can I port, for how long after selling, and at what rate on any top-up? | Avoids the penalty on a mid-term sale |
The first two rows are what the rate-only calculator measures. The rest are what this guide adds.
Putting it together before you sign
Start with the rate gap and the payment, which you can see in the mortgage comparison calculator. Then decide how long you realistically expect to keep the mortgage, because every clause above is worth more or less depending on that horizon. A household that will stay for the whole term, never prepay and never switch can choose on rate alone. A household that expects to sell in three years should weight portability and the penalty heavily. A household that wants to clear the mortgage quickly should weight the lump-sum limit. A household that will use a line of credit should understand what a collateral charge means for its freedom to leave.
Then put prices on the differences. A clause that costs less than the rate gap is a tie-breaker. A clause that costs more is the answer. Where a lender will not put a term in writing before you commit, treat the term as absent. Rely on what is written in the signed contract, not on what was said before it.
One more distinction is worth keeping. Everything in this guide concerns the contract you will hold after you are approved. Whether you are approved, and for how much, depends on your income and the qualifying rate, which are separate questions with their own explainers on this site. Compare lenders on both, but keep the two questions apart so that a low rate is not mistaken for a high approval.