Know the numbers
Credit Report
In Canada, obtaining your credit report is typically free or low-cost depending on how it is accessed. With your consent, your lender or mortgage broker will request your credit history from a credit bureau.
In Ontario, credit reports are primarily issued by:
- Equifax Canada
- TransUnion Canada
These reports include your outstanding debts, payment history, and overall credit score, which lenders use to assess your mortgage eligibility.
Application / Mortgage Processing Fees
Some lenders may charge an application or processing fee, typically ranging from a few hundred dollars, depending on the lender and complexity of the file.
This fee may cover:
- Mortgage application review
- Credit verification
- Administrative processing
In some cases, this fee may be credited back upon closing, depending on the lender’s policy.
What Is APR? (Annual Percentage Rate)
The Annual Percentage Rate (APR) represents the total cost of borrowing expressed as a yearly percentage. It includes:
- Interest rate
- Certain lender fees (where applicable)
- Other financing costs
The APR provides a more complete picture of the true cost of a mortgage than the interest rate alone.
For example, a mortgage advertised at 5.75% interest may have a slightly higher APR once applicable fees are included.
Interest Rate Benchmarks (Canadian Context)
In Canada, variable-rate mortgages are typically tied to the lender’s prime rate, which is influenced by the Bank of Canada policy interest rate.
Rather than U.S.-style “indexes” like Treasury Bills or Federal Funds Rate, Canadian lenders primarily adjust based on:
- Bank of Canada overnight rate
- Prime lending rate set by financial institutions
Points (Upfront Interest Costs)
In Canada, “points” are not commonly structured the same way as in the U.S., but some lenders may offer:
- Rate buydowns (lower interest rate in exchange for upfront cost)
- Discount fees or lender fees embedded in pricing
These costs vary by lender and are not always structured as tax-deductible “points.” Always confirm details with your mortgage professional and tax advisor.
Appraisal Cost
When required, lenders will order a professional appraisal to determine the current market value of the property.
The appraiser considers:
- Recent comparable sales
- Property size and condition
- Market trends in the local area
In Ontario, appraisal costs typically range depending on property type, location, and complexity. This fee is usually paid by the buyer, although some lenders may cover it as part of a promotion.
Miscellaneous Closing Costs
Additional mortgage or closing-related costs in Ontario may include:
- Legal fees (real estate lawyer)
- Title insurance
- Land transfer tax (provincial and municipal, if applicable)
- Registration and administrative fees
- Courier or disbursement charges (handled by your lawyer)
Your lawyer will provide a detailed statement of adjustments before closing.
Prepayment Options and Penalties
Most Canadian mortgages include terms related to prepayment flexibility.
It is important to understand:
- How much extra you can pay annually without penalty
- Whether lump-sum payments are allowed
- Penalties for breaking a mortgage early (e.g., refinancing or selling before term ends)
Common penalty calculations include:
- Three months’ interest
- Interest Rate Differential (IRD), depending on lender and mortgage type
Always review these terms carefully with your lender or mortgage broker before signing.