Your mortgage is likely the largest financial commitment you'll ever make. Getting it right — the right rate, the right term, the right lender — can save you tens of thousands of dollars over the life of the loan. Here are 7 things every Ontario buyer needs to know.
1. Fixed vs. Variable Rate: Which Is Right Now?
In 2025, with the Bank of Canada rate cut cycle underway, variable rates have become more attractive again. A variable rate mortgage moves with the prime rate — when rates drop, so does your payment. Fixed rates offer predictability. Talk to a mortgage broker about your risk tolerance and timeline.
2. Always Use a Mortgage Broker
Mortgage brokers have access to dozens of lenders — big banks, credit unions, B-lenders, and private lenders. They shop the market for you at no cost. Going straight to your bank means you only see one set of products.
3. Understand Mortgage Default Insurance (CMHC)
If your down payment is less than 20%, you're required to pay CMHC mortgage insurance. The premium ranges from 2.8% to 4% of the mortgage amount and is added to your mortgage balance. It's not optional — but it does allow you to get into the market sooner.
4. Stress Test Still Applies
In Canada, lenders must qualify you at the higher of 5.25% or your contract rate + 2%. This means if your actual rate is 4.5%, you're tested at 6.5%. Knowing this upfront prevents surprise when you apply for pre-approval.
5. Prepayment Privileges Matter
- Most mortgages allow 10–20% lump-sum prepayments annually.
- Increasing your payment frequency (bi-weekly vs monthly) shaves years off your mortgage.
- A one-time lump sum of $10,000 in year 2 of a $600K mortgage can save $25,000+ in interest.
6. Don't Make Big Financial Moves Before Closing
Warning: Do not buy a car, open a new credit card, or quit your job between your mortgage approval and closing date. Lenders re-verify your financial situation before releasing funds. Any changes can kill the deal.
7. Renewal Is Your Power Move
When your mortgage term ends (typically 5 years), you're free to switch lenders without penalty. Most Canadians simply renew with their existing lender without negotiating — a mistake that costs thousands. At renewal, shop aggressively or use a broker to get the best rate.