Mortgage Guide: Demystified
Understanding Mortgages (Without the Jargon)
Current rates, strategies, and how to get the best deal.
Where Rates Sit Right Now
Updated August 2026
5-Year Fixed
4.04%
Typical discounted rate for a well-qualified borrower
5-Year Variable
3.40%
Moves with prime — currently the cheaper of the two
Bank of Canada Policy Rate
2.25%
Holding steady as of August 2026
Fixed vs. Variable, Explained
There is no universally right answer. There’s only the one that matches how much payment uncertainty you can live with.
Fixed rate — 4.04%
- Your payment stays exactly the same for the full five years.
- Budgeting is predictable — the number never surprises you.
- You're protected if rates rise during your term.
- You pay a premium today for that certainty.
Best for: people who want certainty, tight monthly budgets, and first-time buyers stretching to qualify.
Variable rate — 3.40%
- Your rate moves when the Bank of Canada adjusts its policy rate.
- Currently cheaper — 3.40% vs. 4.04%.
- It could go down further, or it could go back up.
- Penalties to break are usually much smaller than fixed.
Best for: people who can absorb a payment change, expect to move or refinance mid-term, and have room in the budget.
Run the Numbers
Change the amount, rate and amortization to see what the payment actually looks like.
Payment calculator
Semi-annual compounding, the way Canadian mortgages actually work. Estimate only — your lender’s number is the real one.
Monthly payment
$3,169
At 3.40% variable
$2,964
At 4.04% fixed
$3,169
Difference between fixed and variable today: $205 per month on this amount.
The Pre-Approval Guide
What lenders review
Income and how stable it is, your credit history and score, existing debt payments, and the size and source of your down payment.
How long it takes
Two to three days for a real pre-approval where a lender actually reviews your documents — not the 60-second online estimate.
What it shows you
Your true buying power, including what the payment feels like at that price with taxes, heat and condo fees added in.
Why it matters
A seller weighing two similar offers takes the one from a buyer whose financing is already reviewed. It also stops you from falling for a house you can't buy.
Shopping for Rates
Different lenders on the same file routinely differ by $5,000-$10,000+ over a five-year term. That gap is free money for the ten minutes it takes to ask.
- Get quotes from at least three sources — your bank, a second bank or credit union, and a mortgage broker.
- Don't just accept your own bank's first number. It is almost never their best number.
- Compare the total cost of borrowing over the term, not the headline rate alone.
- Start shopping 120 days before you buy or renew so you can lock a rate hold.
Your Renewal
Renewal is the single easiest place to save money in the whole mortgage, and the place most people give it away.
- Start six months before your renewal date — not the week the letter arrives.
- Shop the market the same way you would for a new mortgage.
- Ask your current lender to beat the best quote you've collected.
- Never simply sign the mailed renewal rate. It's a posted rate, and it's negotiable.
- Switching lenders can save $3,000-$8,000+ over the term, and many lenders cover the switch costs.
Renewal reality check
If you signed two or three years ago, your rate was likely somewhere around 2.5%-3.5%. Today’s five-year fixed is 4.04%. Your payment is going up. The question isn’t whether — it’s by how much, and whether you shopped it.
Old rate 3.00%
$2,585/mo
New rate 4.04%
$2,853/mo
Monthly increase
+$268
Based on a $500,000 balance with 22 years of amortization remaining. Shopping the renewal instead of signing the mailed letter is often worth $3,000-$8,000+ over the term.
Key Terms, Defined
Amortization
The total number of years to pay the mortgage off completely — usually 25 or 30. Longer means smaller payments and far more interest overall.
Term
How long your current rate and contract are locked in — usually 5 years. At the end of the term you renew the remaining balance.
Principal vs. interest
Principal is the amount you borrowed; interest is the lender's charge. Early payments are mostly interest, and the balance shifts over time.
Closing costs
Legal fees, land transfer tax, title insurance, adjustments. Budget 1.5%-4% of the purchase price on top of your down payment.
Pre-approval vs. approval
Pre-approval reviews you. Approval reviews you and the specific property, including the appraisal. Only approval is final.
Stress test
You must qualify at the greater of your contract rate plus 2% or 5.25%. It's why your approved amount is lower than the payment math suggests.
Free Downloads
Print these, take them to your lender appointments, and fill them in.
Mortgage Questions to Ask Your Lender
Every question worth asking about rate, fees, prepayment privileges, penalties and approval — organized so you can compare answers side by side.
Download PDFRenewal Shopping Checklist
A month-by-month plan starting six months before your renewal date, plus the three things never to do with a renewal letter.
Download PDFRate Comparison Worksheet
A printable grid for three lenders covering rate, term, fees, penalties and total cost of borrowing — because the lowest rate isn't always the lowest cost.
Download PDFConfused about your mortgage options?
Amanda works with trusted mortgage professionals for detailed guidance, and can point you to the right one for your situation — pre-approval, purchase or renewal.
Rates shown are typical discounted rates as of August 2026 and change frequently. This page is general information, not mortgage advice.