5 Questions to Ask Your Mortgage Broker in Canada

Shopping for your first mortgage can feel like a big step, but it doesn’t have to be confusing. As someone who’s helped many young Canadians navigate their first home purchase, I’ve found that asking a few key questions up front keeps everything clear and stress-free.

1. Which Mortgage Type Fits Your Plans?

Every mortgage falls into one of three categories: fixed rate, variable rate, or a combination of the two. A fixed rate keeps your interest and payments the same for the entire term, which makes budgeting simple. A variable rate often starts lower but can rise or fall as the Bank of Canada adjusts its key rate. A combination mortgage lets you split part of your loan at a fixed rate and part at a variable rate. Think about how long you plan to stay in your home and how comfortable you are with possible rate changes.

2. What’s the Total Cost? Posted Rate versus APR

Banks and brokers often advertise their discounted rate front and center, but that’s not the whole story. The posted rate is the lender’s list or standard rate before any discount is applied. Your discounted rate is what you actually pay each month. Meanwhile the annual percentage rate, or APR, reflects the true cost over the term by including most lender fees such as application or administration charges. Comparing APRs across lenders gives you a clear picture of which offer really costs you the least in the long run.

3. Which Fees and Penalties Should You Expect?

Beyond interest there are a variety of fees that can catch you off guard if you’re not prepared. You may face application fees, appraisal and legal fees, property transfer taxes, and discharge fees when you pay off or switch mortgages. If you decide to break your mortgage early or pay more than your allowed prepayment limit the lender will charge a penalty. Ask your broker for a written fee schedule so youknow exactly what you’ll owe, both now and if you need to make changes later.

4. How Much Can You Actually Afford? Stress Test and Ratios

Lenders use a “stress test” to ensure you could handle higher interest rates in the future. They also look at two key ratios: the gross debt service ratio, which compares your housing costs to your income, and the total debt service ratio, which compares all your debts to your income. By running your numbers through these measures your broker can tell you the maximum mortgage you qualify for and suggest a payment that keeps you comfortable. This way you won’t feel stretched too thin if interest rates rise or unexpected expenses pop up.

5. How Flexible Are Your Prepayment Options?

If you come into extra cash—perhaps from a bonus, gift, or savings—you’ll want to use it to pay down your mortgage faster. Lenders usually allow an annual lump-sum payment of around 10 to 20 percent of your original mortgage amount, and they may let you increase your regular payments by a set percentage. Exceeding these limits can trigger a penalty based on the lender’s posted rate. Ask for all prepayment details so you can plan a five- or ten-year strategy to reduce your interest costs and own your home sooner.

Next Steps

By covering these five areas with your mortgage broker or lender you’ll gain confidence, avoid hidden fees, and choose the best mortgage for your needs. Ready to get personalized advice and step into homeownership?