Why the Lowest Rate Can End Up Costing You More
10 Questions to Ask Before You Choose Your Next Mortgage
Everywhere you look—online ads, promotional emails, comparison tools—mortgage rates are front and centre. It is no wonder many borrowers focus on getting the absolute lowest rate they can find.
However, the cheapest-looking rate is often not the most cost-effective mortgage.
Whether you are planning to renew, refinance, or switch lenders, it is critical to look deeper than the headline number. The right questions will help you avoid costly surprises later.
The Fine Print Matters More Than You Think
Some lenders attract attention with introductory rates that later adjust upward, often by a significant margin. Others will promote “basic” mortgages that offer very limited features, all to appear more competitive on rate alone.
Keep in mind, too, that the most aggressive rates are usually linked to insured mortgages—those where you put down less than 20% of the purchase price. These carry lower risk for lenders. If you have a larger down payment or more equity, that ultra-low rate may simply not apply to you.
Before you commit to any mortgage, consider these 10 important questions:
1. Is this rate only offered for insured mortgages?
Borrowers with over 20% equity often do not qualify for the same pricing as insured mortgages.
2. Are there options for lump-sum payments or increasing my regular payment?
Flexible repayment privileges are valuable if you plan to pay down your mortgage faster.
3. What would it cost to break this mortgage before maturity
Circumstances change. You need a clear understanding of potential penalties if you end the term early. These can vary dramatically by lender.
4. Is this rate an introductory offer?
A rate that resets higher after a short period can make the mortgage more expensive over time.
5. Does this mortgage exclude standard features?
Many low-rate products restrict prepayment options, refinancing flexibility, or portability if you move.
6. Can I port this mortgage to a different property? Without portability, moving could trigger substantial prepayment fees.
7. Is this a fixed or variable rate mortgage? Fixed rates offer predictable payments. Variable rates can fluctuate. Consider which approach fits your comfort level with risk.
8. How does the lender calculate penalties on a fixed rate? Some lenders use stricter comparison rates in the interest rate differential calculation, making early exits far more expensive.
9. What is the lender’s reputation for service and approval process?
A low rate loses its appeal if your experience is stressful or support is lacking.
10. What is the total cost over the full term?
Evaluate the overall cost, not just the advertised rate. Often, a slightly higher rate with better terms and flexibility will save you more in the long run.
A Great Mortgage is About More Than Rate
Choosing a mortgage is about aligning the product with your long-term plans and protecting yourself from unexpected costs. The right mortgage is one that works for your life—not just your budget.
If you are exploring options, I can help you compare, weigh the trade-offs, and choose confidently.
