How to compare mortgage rates and find the best deal for your home loan

The lowest rate on a page is not always the cheapest mortgage. Here is how to line up two offers so you're comparing the same thing, with a worked example at the end.

Posted rates and discounted rates

Lenders advertise posted rates for each term they offer. The rate in your contract can be higher or lower than that. When it's lower, the Financial Consumer Agency of Canada (FCAC) calls it a discounted rate. FCAC says you may be able to negotiate a lower rate, so treat a posted rate as the start of the conversation, not the price.

The posted rate still matters after you sign, because some lenders use it to work out the penalty if you break the mortgage early. More on that below.

We don't show live rates. If you want a reference point, the Bank of Canada publishes the typical posted rates of the six largest banks each week. The offers you get may well be lower.

Fixed or variable

A fixed rate stays the same for the whole term, and so do your payments. FCAC notes it is usually higher than a variable rate for a similar term. A variable rate can rise or fall during the term. Some variable mortgages adjust your payment when the rate moves. Others keep the payment fixed, so when rates rise more of each payment goes to interest. If the rate climbs far enough, the payment no longer covers the interest at all, and the balance grows. For a variable-rate mortgage with fixed payments, a federally regulated lender must state that rate, called the trigger rate, in your agreement or disclosure.

Comparing fixed with variable isn't comparing two prices. It's choosing how much rate risk to carry.

Term and amortization are different things

The term is how long your contract, including its rate, is in effect. Terms run from a few months to five years or more. The amortization is how long it would take to pay the whole loan off. A 5-year term on a 25-year amortization means you'll renew several times.

Only compare offers with the same term and amortization. A longer amortization lowers the payment but means more interest overall. With less than 20% down, the maximum amortization is 30 years for first-time buyers and for new builds, and 25 years otherwise. With 20% or more down, the lender sets the maximum.

APR and the cost of borrowing disclosure

If your lender is federally regulated, such as a bank or a federal credit union, it has to give you a disclosure statement with an information box at the top. The box lists, among other things:

the principal, the term, whether the mortgage is open or closed, and the amortization;
the annual interest rate and how it's compounded;
the APR (annual percentage rate), if it differs from the interest rate;
your prepayment privileges, and the penalty charges with a brief explanation of how they're calculated;
the cost of mortgage default insurance and any other charges, such as a discharge fee.

The statement also shows the total of your payments over the term and the cost of borrowing: interest plus charges such as admin fees, appraisal or inspection fees the lender requires, and a broker's fee when it's added to the loan and paid by the lender. The federal regulations turn that cost into the APR with a set formula, so a quote with a low rate but heavy fees shows up with a higher APR.

Know what the APR leaves out. By regulation, the cost of borrowing does not include the premium for default insurance on a high-ratio mortgage, prepayment penalties, title insurance you pay for directly, registration fees, or discharge fees. So the APR is a good way to compare fees between lenders, but it won't tell you about penalties or the CMHC premium.

Timing: the initial statement is due at least two clear business days before you sign, unless one of the exceptions in the regulations applies, such as when you agree to receive it later. At renewal, the statement must arrive at least 21 days before your term ends. If your lender isn't federally regulated, these exact federal rules don't apply, but ask for the same information anyway.

Prepayment privileges and penalties

A prepayment privilege is what you can pay on top of your regular payments without a penalty, usually a yearly lump sum up to a percentage of the original amount and a cap on how much you can raise your payment. Most lenders limit it per year, and you typically can't carry unused room forward.

The penalty for paying more than that, or for breaking the mortgage, is usually the higher of three months' interest or the interest rate differential (IRD). How the IRD is worked out varies. Some lenders compare your rate with their current rate for the time left. Others start from the posted rate and subtract the discount you got when you signed. When that discount was large, the second method can produce a much bigger penalty. Ask each lender which method it uses, in writing, and test it with our prepayment penalty calculator.

Portability

A portable mortgage lets you take your balance, rate and terms to a new home when you sell, instead of breaking the contract and paying a penalty. Rules vary. If the new home costs less than the amount of your mortgage, you may still pay a prepayment penalty. Might you move before the term ends? Ask about porting first.

Rate holds

A pre-approval can lock in a rate for 60 to 130 days, depending on the lender. It is not a guarantee that you'll get the mortgage. Three questions to ask: how long the rate is guaranteed, whether you automatically get a lower rate if rates fall during the hold, and whether the pre-approval can be extended.

Bank, broker or monoline

Lenders, such as banks, credit unions, trust companies and mortgage companies, lend you the money directly. Prices for similar products differ, so talk to more than one.

Mortgage brokers don't lend. They find a lender for you. Some products are only sold through brokers, and brokers don't all have access to the same lenders, so ask which ones they work with. Brokers are generally paid a commission by the lender rather than a fee by you, but confirm that. Brokers are licensed by the province. In Ontario you can look up a brokerage or agent on the FSRA licence register.

Monoline lenders are lenders that don't take deposits and specialize in mortgages. The term comes from the broker world, and that's usually where you'll meet them.

Insured and uninsured pricing

If your down payment is under 20%, the mortgage must be insured against default, and the premium is usually added to your loan. Insured mortgages often get lower rates than uninsured ones; the Bank of Canada's monthly figures for new bank lending showed insured rates below uninsured in each month from March to July 2026. The main reason is funding. Insured mortgages can go into federal programs (NHA mortgage-backed securities and Canada Mortgage Bonds) whose investors are protected by the federal government's backing. That lets lenders raise money at rates close to what the government pays, and the Bank of Canada says this helps lower mortgage costs for borrowers.

Don't compare an insured rate with an uninsured rate in isolation. The insured rate comes with a premium that can run to several percent of the loan, plus 8% Ontario sales tax on that premium, payable at closing. The premium is not part of the APR. Run your numbers in the CMHC insurance calculator first.

A worked comparison

Example only. Both offers and every rate below are made up to show the method. They are not current rates or a recommendation.

Two offers on a $500,000 mortgage, 25 years amortization, 5-year fixed, monthly payments, with interest compounded semi-annually, as is usual for Canadian fixed-rate mortgages. Offer A is 4.24%. Offer B is 4.09% but uses the posted-rate method for its penalty. Figures come from the same math as our mortgage calculator.

If you keep it for the full term	Offer A (4.24%)	Offer B (4.09%)
Monthly payment	$2,695.56	$2,654.56
Interest over 5 years	$98,804.44	$95,222.46
Balance at the end of the term	$437,070.84	$435,948.86

Kept for five years, B wins: $41.00 less a month, $3,581.98 less interest, and a balance $1,121.98 lower at renewal.

Now say you sell after three years and can't port. Assume Offer A's lender compares your rate with its current 2-year rate of 3.74%. Offer B's lender posted 6.09% when you signed, so your discount was 2.00 points, and it now posts 5.24% for 2 years, so it compares against 5.24% − 2.00% = 3.24%.

If you break it after 36 months	Offer A	Offer B
Balance after 36 payments	$463,836.35	$463,134.48
Three months' interest	$4,916.67	$4,735.55
Interest rate differential (24 months left)	$4,638.36	$7,873.29
Penalty (the higher of the two)	$4,916.67	$7,873.29
Interest paid over 36 months	$60,876.51	$58,698.64
Interest plus penalty	$65,793.18	$66,571.93

In this case A comes out $778.75 ahead, despite the higher rate. The penalty method outweighed three years of rate savings.

Prepayment terms can matter too, though usually by less. Suppose A lets you prepay 20% of the original amount each year and B allows 10%, and in year two you want to put $75,000 down. B's limit is $50,000. Using the same assumed rates, the extra $25,000 would cost about $637.50 in penalty at B. That's far less than B saves over a full term. Run your own version with the penalty calculator.

Checklist for each offer

Same term, amortization, payment frequency and fixed or variable for every offer you compare.
Contract rate, the lender's posted rate for that term, and the APR from the disclosure statement.
All fees in the cost of borrowing, and any fees outside it, like appraisal or discharge.
Penalty method in writing: three months' interest, IRD, and which rates go into the IRD.
Prepayment privileges: lump-sum percentage, payment increase, and when each can be used.
Portability: allowed or not, time limits, and what happens if the new mortgage is smaller.
Rate hold: length, whether a drop in rates is passed on, and whether it can be extended.
For variable offers: payment adjusts or stays fixed, and the trigger rate.
If insured: the premium and the 8% Ontario sales tax due at closing.
A lender, or a licensed broker (check the FSRA register in Ontario), and how they're paid.

This is an estimate for general information. It is not advice about your situation. Check the final numbers with your lender, your real estate lawyer, or the official source.

Sources

Last checked: October 10, 2026