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Your Mortgage: More than Just an Interest Rate

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At Mortgage Connection, our mortgage brokers are committed to looking after your best interests. That includes getting you a low interest rate.

However, the interest rate is just one of many aspects of a mortgage. There are other key factors that need to be considered when you are determining which mortgage solution is best suited to your needs. If you are looking to acquire your first mortgage you should speak to a mortgage broker before committing to a lender.

Important Factors to Consider when Choosing Your Mortgage

On its own a low-interest rate is desirable: It keeps payments relatively low and results in lower interest costs. However, there are other important factors to consider when choosing your mortgage in addition to your interest rate.

Fixed Rate vs. Variable Rate

Mortgages come in both fixed rate and variable rate varieties. In a fixed rate mortgage the rate does not change during the term of your mortgage. In a variable rate mortgage, the rate may change at any time during the course of the term.


The term of a mortgage refers to how long the mortgage agreement is in place. The most heavily advertised mortgage terms in Canada are typically three to five years. In addition to the duration of the mortgage, the term of the mortgage may also be open or closed.

Whether a mortgage is open or closed can affect the level of flexibility you have when it comes to accelerated payments, and whether or not paying off your mortgage sooner than you planned will result in financial penalties.


The amortization period of your mortgage determines the number of years you will need to pay off the entire balance on your mortgage based on the agreed upon payment amount and interest rate. Most mortgages feature an amortization period of 25 years.

Shorter amortization periods tend to save you money in the long run, since you end up paying less in interest costs over the lifetime of your mortgage. However, shorter amortization periods also means that your mortgage payments will likely be higher. This will allow you to build up equity in your home faster, and allow you to pay off your mortgage sooner.

Longer amortization periods mean lower monthly payments, making this an attractive option to many borrowers. However, you will end up paying more interest over the course of your mortgage because you are taking a longer period of time to pay off the principal portion. A longer amortization period also means that you will be building up equity in your home more slowly than if you had chosen a shorter amortization period.

Current lending regulations require that any mortgage with an amortization period greater than 25 years must be secured with a minimum 20% down payment.

Prepayment Flexibility and Penalties

The terms and conditions of your mortgage agreement stipulate a variety of other important factors, including:

  • The ability to make lump-sum payments in order to pay down your mortgage faster without incurring any financial penalties.
  • What costs you will incur (if any) should you decide to break your mortgage term before it matures. All mortgages are not created equally and this can be a major difference in determining the right mortgage for you.

Insurance Requirements

Depending on the terms of your mortgage agreement you may be required to obtain mortgage default insurance. This, in turn, will add a premium to your borrowing costs.

Mortgage Connection is Your Solution

There are many important factors besides interest rate to consider when selecting the right mortgage for your home. As mortgage brokers, our ultimate goal is to save you money on your mortgage by working closely with you so we can understand your requirements and provide a mortgage solution that is tailored to suit your financial and homeownership needs.

Written by
Josh Higgelke

Josh is a natural leader and driven entrepreneur. It is fitting that he is a Managing Partner and Broker of Record for Mortgage Connection. Josh has always had a love for everything real estate related and became a Mortgage Broker in 2007. He has since been recognized as one of the top leaders in his field. His energy for life is contagious and he has a passion for the mortgage business. Josh is a builder of systems and people. He is actively involved in both residential lending and commercial lending and strives for Mortgage Connection to be the best option for all real estate financing needs.

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