Your credit history and the lender's assessment
Lenders use your credit report and score when deciding whether to lend and how much interest to charge. A stronger credit history may help you obtain a lower rate, but it does not guarantee a particular offer. FCAC also identifies self-employment, the specific lender and eligibility for a discounted rate as factors that can affect pricing. [1][2]
For a useful comparison, ask each lender which assumptions its quote uses. Keep the requested loan amount and mortgage features consistent when asking for competing quotes, and ask what documentation the lender needs to confirm its offer.
Fixed or variable: compare the risk as well as the rate
A fixed mortgage rate stays the same for the term. A variable rate can change during the term. The lower starting quote, if there is one, does not establish which option will cost less over the whole term: future rates are uncertain. [1]
Variable-rate payment arrangements differ. With adjustable payments, the payment changes with the rate. With fixed payments, a rising rate directs more of each payment to interest and less to principal; if the payment becomes insufficient to cover interest, the amount owed may grow. Separately, FCAC describes a contractual interest-rate trigger point: when the rate reaches that point, the lender may increase payments to keep amortization on track. The trigger point concerns a possible payment increase under the contract, while balance growth concerns a payment that does not cover interest. Ask the lender how both risks are handled under your contract; a fixed payment does not mean a fixed borrowing cost. [1]
Term length and repayment flexibility change the comparison
The term is how long the current mortgage contract lasts. It is not the same as amortization, the period over which the mortgage is repaid. FCAC notes that term length affects the rate, renewal timing and possible penalties for ending the contract early. A longer amortization typically reduces the regular payment but increases interest paid over time. [2]
An open mortgage generally offers more freedom to make extra payments or repay the loan, and typically has a higher rate than a closed mortgage with a similar term. Closed mortgages may include limited prepayment privileges. Compare those limits and the early-exit penalty rules before treating a lower closed-mortgage rate as the cheaper overall choice. [2]
Down payment: separate the rate from the total borrowing cost
A larger down payment reduces the amount you need to borrow. Mortgage loan insurance may also be required; it protects the lender, not the borrower. If an insurance premium is added to the mortgage, interest is charged on that premium too. [3]
This is why two rate quotes are not necessarily comparable if one assumes a different down payment or insurance arrangement. Ask whether the quote requires mortgage loan insurance, whether any premium is included in the loan amount, and what must be paid separately. A smaller quoted rate alone does not prove a smaller total cost. This article does not quote insurance eligibility thresholds or premium tables; confirm the applicable requirements for the specific property and loan.
Compare written offers on the same basis
FCAC describes mortgage interest options, term, amortization, prepayment flexibility, portability and mortgage loan insurance. Use these topics as a comparison sheet rather than recording only the rate. [1][2][3]
- Is the rate fixed or variable, and how long is the term?
- What loan amount and amortization does the payment assume?
- Does the offer assume mortgage loan insurance, and how is its premium paid?
- Is the mortgage open or closed? What extra payments are permitted?
- How is an early-repayment penalty calculated?
- If you move, is the mortgage portable and what conditions apply?
Separately, ask the lender what fees and conditions accompany its written quote and when that quote expires. Those are offer-specific questions, not FCAC rules about offer expiry.
Keep the interest rate, regular payment and overall costs as separate entries. A lower payment may reflect a longer repayment period rather than a better rate. A rate that looks attractive may come with flexibility limits that matter if your plans change. [2]
Two common questions
Does good credit guarantee the lowest mortgage rate?
No. Credit history is one factor, alongside the lender, term, interest type and eligibility for discounts. A lender must assess the actual application before confirming the available offer. [1][2]
Is a fixed-payment variable mortgage the same as a fixed-rate mortgage?
No. The variable interest rate can change even when the regular payment initially stays the same. That changes how much of the payment reduces principal. A contractual interest-rate trigger point may lead to higher payments; separately, insufficient interest coverage can increase the balance owed. A fixed rate remains unchanged for its mortgage term. [1]
Before choosing an offer
Ask a licensed mortgage professional to explain the conditions behind the offers you are comparing, including payment changes, insurance costs and the cost of ending the mortgage early. Mortgage Wave can discuss your circumstances; this article does not select a mortgage or predict approval, savings or future rates.
General Canadian mortgage education only, not personalized financial advice or a lender commitment. Rates, rules and product availability can change. Confirm the current written terms and eligibility with the lender or a licensed mortgage professional.
Sources
The three FCAC sources below were consulted September 18, 2026, and rechecked October 18, 2026. These are source-consultation and evidence-recheck dates, not this article's publication date. No current lender rate is quoted.
- [1] https://www.canada.ca/en/financial-consumer-agency/services/mortgages/interest-on-mortgages.html — Interest on mortgages
- [2] https://www.canada.ca/en/financial-consumer-agency/services/mortgages/choose-mortgage.html — Choosing a mortgage that is right for you
- [3] https://www.canada.ca/en/financial-consumer-agency/services/mortgages/down-payment.html — How much you need for a down payment