How do I compare mortgage offers?
Want to save tens of thousands on your mortgage? Here’s how to compare offers and pick the one that actually pays off.
Why comparing mortgage offers matters (and why most people lose)
Lenders make the headline rate look simple. It’s not. Two mortgages with the same rate can cost wildly different amounts over time. If you don’t compare the full package — rate, fees, terms, penalties, and flexibility — you’ll pay more. In Georgetown, Ontario, local market factors and lender practices make careful comparison critical.
This guide gives a step-by-step system you can use right now to compare mortgage offers. No fluff. No guesswork. Just the exact checks that matter in Georgetown.
The core things every mortgage comparison must include
When you look at offers, treat each one like a product with multiple features. Compare these pieces, not just the interest rate:
- Interest rate (fixed vs variable)
- Annual Percentage Rate (APR) — includes fees
- Mortgage term (short-term vs long-term)
- Amortization period
- Prepayment options and limits
- Penalty for breaking the mortgage
- Closing costs and lender fees
- Broker commission vs direct lender pricing
- Portability and assumption options
- Special local incentives (credit-union deals, community programs)
If any lender won’t give you clear answers on these, move on.
Step-by-step checklist to compare mortgage offers — use this exact sequence
- Get at least three written offers. One from a bank, one from a credit union, one from a broker. In Georgetown, include at least one local credit union and one national bank.
- Request APR for each offer. APR forces lenders to disclose the cost of fees with the rate.
- Ask for a full fee list in writing: appraisal, administration, discharge, legal, CMHC insurance (if applicable).
- Confirm prepayment privileges: how much can you pay annually without penalty? Is there a lump-sum allowance? Are interest-only payments allowed?
- Calculate the 5-year and full amortization costs. If you plan to sell or refinance in 3–5 years, focus on short-term cost and penalties.
- Get penalty details in writing. Ask the lender to show the formula for calculating a break penalty.
- Verify portability and assumption rules. If you may sell or transfer the mortgage, these options save money.
- Compare total cash required at closing: down payment, closing costs, first mortgage payments.
- Check lender reputation and service in Georgetown. Quick closings and clear communication matter.
- Make a side-by-side comparison sheet with rate, APR, fees, prepayment, penalty, and total 5-year cost.
How to calculate the real cost — sample quick math (use this on every offer)
Example: Offer A — 3.19% fixed, 25-year amortization, $1,200 in lender fees, no prepay penalty details provided.
Steps to compare:
- Convert the interest and amortization to monthly payment. (Use an online mortgage calculator or your lender’s amortization schedule.)
- Add upfront fees to the first year’s cost to approximate the real first-year cost.
- Use APR as a check — if APR is significantly higher than the rate, fees are large.
Quick rule of thumb: For mortgages under 5 years, fees matter more than a 0.1% rate difference. For longer plans, small rate differences compound.
The single biggest hidden cost: penalties
Penalty math kills good deals. Banks calculate penalties differently than lenders. In Canada, penalties are usually: three months’ interest for variable-rate or the greater of interest rate differential (IRD) or three months’ interest for fixed-rate. IRD formulas vary and can be huge.
Always ask for the exact penalty formula and a sample penalty calculation for early payoff at year 2 and year 4. If the lender refuses, that offer is risky.
Georgetown, Ontario specifics — what changes here
- Local inventory and time-to-sell matter. Georgetown is competitive. If you must sell quickly, a mortgage with lower penalties and high portability wins.
- Credit unions around Halton Hills often offer flexible prepayment options and local service. Include them.
- If your down payment is under 20%, CMHC insurance applies. That changes APR and monthly payment. Ask each lender to show the insured rates and premiums.
- Property taxes, local assessments, and closing costs in Georgetown can shift your required cash at closing. Request a clear closing cost estimate from each lender.
Broker vs bank vs credit union — who to use in Georgetown
- Local credit unions: Better local knowledge. Often more flexible on prepayments and penalties. Good for long-term relationships.
- Big banks: Predictable service, branch convenience, sometimes lower posted rates but higher fees.
- Mortgage brokers: Access to multiple lenders, faster rate shopping, can find lender specials. Make sure the broker discloses commissions and presents net cost comparisons.
A smart strategy: get a baseline from a bank, then shop credit unions, then let a broker match or beat the best package. Always validate broker offers by asking the lender for a confirmation email.
Negotiation moves that actually work
- Use competing offers as leverage. Bring written quotes and ask the lender to match or beat the full package, not just the rate.
- Ask for a reduction in lender fees or that they be waived. Banks will often waive legal or administration fees for a strong file.
- Negotiate prepayment privileges. Adding a 10–20% lump-sum prepayment option can save thousands over the mortgage life.
- Ask for a lower penalty or a cap on IRD. Lenders sometimes agree when competition is real.
Common traps to avoid
- Focusing only on the interest rate.
- Ignoring APR and total fees.
- Not checking penalties and prepayment rules.
- Assuming all lenders use the same penalty formula.
- Forgetting local closing costs and CMHC premiums.
Closing the deal — decision checklist
Before signing, run this list:
- Do I have three written offers? Yes/No
- Is APR listed for each? Yes/No
- Are all fees disclosed in writing? Yes/No
- Are prepayment privileges acceptable? Yes/No
- Do I understand the exact penalty formula? Yes/No
- Have I compared total 5-year cost? Yes/No
- Is the lender responsive in Georgetown? Yes/No
If any answer is No, pause and fix it.
Why work with a local expert
A local mortgage-savvy realtor saves you time and money. They know which lenders move fast in Georgetown, which credit unions give flexible terms, and how closing timelines affect your move. That knowledge turns small rate differences into real dollars saved.
Tony Sousa combines local market insight with mortgage negotiation tactics. He’ll help you gather comparable written offers, decode penalty formulas, and pick the package that fits your timeline in Georgetown.
Contact Tony: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
FAQ — Quick answers for home sellers in Georgetown, ON
Q: How many mortgage offers should I get before deciding?
A: At least three: one bank, one credit union, one broker. More if you’re unsure.
Q: What matters most if I plan to sell within 2–5 years?
A: Penalties, portability, and 5-year total cost. Lower headline rates can lose if penalties are high.
Q: Is APR the same across lenders in Ontario?
A: No. APR includes fees and gives a clearer cost comparison. Use it to compare apples to apples.
Q: Should I use a mortgage broker in Georgetown?
A: Yes, if they disclose commissions and show detailed side-by-side cost comparisons. Brokers can access deals banks won’t present directly.
Q: What’s a safe prepayment strategy?
A: Aim for at least 10–20% annual lump-sum allowance or 10–20% of the original mortgage principal over the year in flexible payments.
Q: How do CMHC premiums affect my mortgage cost?
A: They increase the mortgage principal and monthly payment. Get a full amortization showing CMHC included.
Q: What local lenders should I consider in Georgetown?
A: Halton Hills-area credit unions, national banks with branch presence in Halton, and brokers who specialize in Peel/Halton markets.
Q: What’s the biggest mistake sellers make with financing?
A: Signing a mortgage without checking penalties and prepayment terms.
Ready to compare offers the right way? Get local help. Email tony@sousasells.ca or call 416-477-2620. Tell them you want three written offers and a side-by-side cost breakdown for Georgetown, ON. Book a 20-minute review and get a plain-language recommendation.
Tony Sousa — Local Realtor. Practical. Direct. Results.
