How do I compare mortgage offers?
Want to stop overpaying on your mortgage? Compare offers in 10 minutes and save thousands.
Quick answer that actually works
Most buyers compare only interest rates. That’s backwards. To pick the best mortgage, compare effective cost: interest rate, APR, lender fees, amortization, prepayment options, and penalties. Use a simple checklist and one quick math step to see the real winner.
Step-by-step checklist to compare mortgage offers
- Interest rate vs APR: Rate tells monthly cost. APR combines rate + upfront lender fees. APR gives a clearer cost picture for the full term.
- Upfront fees: Application, appraisal, legal, and origination fees can wipe out a lower rate. Add them to the loan balance for comparison.
- Amortization and term: Shorter amortization = lower interest paid. Term affects renewal/refinance risk.
- Prepayment rules: Flexible prepayments can save tens of thousands. Check annual limits and penalties.
- Portability and assumption: Can you move or transfer the mortgage without penalty?
- Total cost over term: Calculate total payments (monthly payment × months) + fees + penalties.
- Lender reliability: Online reviews, funding speed, and local service matter when closing dates are tight.
Simple math to find the true cost (use this every time)
- Step A: Convert annual rate to monthly and compute monthly payment using a mortgage calculator.
- Step B: Total cost = (monthly payment × number of months) + upfront fees + expected penalty costs.
- Step C: Compare totals across offers. Lowest total = best deal for your plan.
Example (approximate):
- $400,000 mortgage, 25-year amortization
- Offer A: 3.50% with $2,000 fees. Offer B: 3.25% with $6,000 fees.
- Monthly difference may be $60 lower on Offer B — $60 × 300 months = $18,000 savings minus $4,000 extra fees = $14,000 net benefit. That’s why you must compare totals, not just rates.
Practical tips that save money now
- Always get an APR and a fee breakdown in writing.
- Run numbers for your planned holding period (5 years, 7 years, etc.). If you’ll refinance in 5 years, compute 60 months of payments + fees.
- Ask for prepayment examples: how much would a $50,000 early payment reduce your term and interest?
- Negotiate lender fees — many are flexible if you ask.
- Use local experts who know the lenders and current specials.
Why work with a local financing expert
Putting numbers in one spreadsheet takes time and experience. Tony Sousa reviews offers, calculates total-cost comparisons, and finds the lender that matches your timeline. That reduces risk and keeps more money in your pocket.
Want a fast, no-nonsense comparison? Email Tony at tony@sousasells.ca or call 416-477-2620. Visit https://www.sousasells.ca for a free checklist and an example comparison spreadsheet.
Act fast. A small change in rate or fee today can save you thousands over your mortgage life.
