Questions to ask before you sign a mortgage offer
Checked against primary sources
Before you sign a mortgage commitment, confirm how the prepayment penalty is calculated, what you can prepay each year, whether you can port it, whether it's a standard or collateral charge, what happens to any cashback if you leave early, and every condition and fee. Get each answer in writing; a lower rate can hide a costlier contract.
How will my prepayment penalty be calculated?
Ask for the method in words and an example in dollars. On a fixed rate it's usually the greater of three months' interest and the interest rate differential; the IRD can be based on the lender's posted rate or your contract rate. Federally regulated lenders must include the penalty explanation in the information box and post a calculator; Ontario brokerages must disclose how any penalty is calculated.
Source: Financial Consumer Agency of Canada, Mortgage fees: prepayment penalties, effective October 15, 2025. Checked .
Source: Justice Laws, Financial Consumer Protection Framework Regulations (SOR/2021-181), effective June 30, 2022. Checked .
Source: Government of Ontario (e-Laws), Mortgage Brokerages, Lenders and Administrators Act, 2006. Checked .
What can I prepay, and can I port or assume it?
Ask for the annual lump-sum limit, the payment-increase limit and whether unused privileges carry forward. Ask whether you can move (port) the mortgage to a new home and on what terms, and whether a buyer can assume it. These shape how much any penalty could be.
Is it a standard charge or a collateral charge?
A collateral charge registers for more than you borrow so the lender can re-advance later without new legal work. FCAC notes it can cost more to switch lenders at renewal. Know which you're signing.
Source: Financial Consumer Agency of Canada, Renewing your mortgage, effective October 15, 2025. Checked .
What happens to cashback, fees and the rate hold?
- Cashback: is it repaid if you break or move early, and how is the repayment calculated?
- Fees: lender, broker, appraisal, legal. Who pays, and are they in the cost of borrowing?
- Rate hold: how long, and do you get a lower rate if the lender's rate drops before closing?
- Conditions: appraisal, income verification, condo status certificate; the date each must be met.
How much can the fine print be worth?
Same $600,000 mortgage, same 4.58% rate, broken at month 30 after rates fall a point: about $16,125 under a posted-rate IRD vs $14,145 under a contract-rate IRD. That's more than the interest saved by a 0.10-point lower rate over five years ($2,874).
Check variable-rate offers too: the typical new uninsured variable rate was 3.90% (2026-08) when prime was 4.45% (2026-10-28). Ask how the payment changes when prime moves.
Frequently asked questions
What should I look for in a mortgage commitment letter?
The rate and term, how the prepayment penalty is calculated, prepayment and porting privileges, whether it is a standard or collateral charge, cashback repayment terms, fees, conditions and their deadlines, and the rate-hold expiry.
Can I negotiate my mortgage offer?
Yes. Rates, fees and some terms are negotiable. Bring a competing written offer and ask the lender to match it.
How long do I have to review mortgage disclosures in Ontario?
Ontario brokerages must give their disclosures at least two business days before you sign, unless you waive that in writing.
Sources
- Financial Consumer Agency of Canada — Mortgage fees: prepayment penalties (effective October 15, 2025). Checked .
- Financial Consumer Agency of Canada — Code of conduct: mortgage prepayment information (effective September 24, 2025). Checked .
- Justice Laws — Financial Consumer Protection Framework Regulations (SOR/2021-181) (effective June 30, 2022). Checked .
- Government of Ontario (e-Laws) — Mortgage Brokerages, Lenders and Administrators Act, 2006. Checked .
- Government of Ontario (e-Laws) — O. Reg. 188/08: Mortgage brokerages, standards of practice (effective March 1, 2022). Checked .
- Financial Consumer Agency of Canada — Renewing your mortgage (effective October 15, 2025). Checked .
Estimate, not advice. Educational estimate only, not financial, mortgage, tax or legal advice. Lenders, insurers and governments set their own rules and can change them; confirm with a licensed professional before you decide.