rate. Here are five practical, sometimes counterintuitive, ways to keep more of your money where it belongs: in your pocket.

 

1. Lock in Your Rate Sooner, Not Later

Many people make the mistake of waiting too long to lock in their mortgage rate, hoping something better comes along. But here’s the thing—mortgage rates can move fast. Blink and you could miss the deal you thought you’d secured. We’ve seen it happen more times than we can count: a client comes back ready to proceed, only to find the rate’s gone up and they’re now stuck with a higher cost.

Even in a falling rate environment, there can be bumps along the way. The market reacts to news instantly—bond yields spike, rates follow, and just like that, your “wait and see” approach costs you thousands.

At PMT Mortgage, we’re very serious about getting you the lowest rate on the market. We will be monitoring rates for you right up until closing.  We’ll do the rate shopping, so you don’t have to. So, we won’t just save you money, but time as well. 

Sure, you can still hold off if you want to. But there is no advantage to you for doing so. When a mortgage approval is issued, your rate becomes locked. But this still gives you the freedom to move to another lender if needed… even if you’ve already signed all the approval documents. You are not legally bound until you sign at your lawyer’s office at time of closing. There is no risk in getting your approval in place to lock in a rate. But waiting? That’s where the risk lives.

 

2. Be Conscious of Mortgage Penalties 

Thinking of breaking your mortgage early? That “great rate” might come back to haunt you.

This is more relevant to those interested in fixed rate mortgages. With variable rate products, the penalties to return the funds to the lender early, known as breaking your mortgage, are limited to three months of interest. However, this can be calculated using either the contract rate (your actual interest rate), or the prime rate. As the latter is generally higher, the penalty would be higher as well. 

There can be a much larger difference when breaking a fixed rate mortgage. Regardless of lender, the penalty to break a fixed rate mortgage is the higher of three months interest or the interest rate differential (IRD).  Three months interest is easy to understand. But what the heck is an IRD?  This is the difference between your current rate and the new rate the lender says they can get when they re-lend the money after they have been repaid for the loan. The IRD compensates the lender for lost profit. 

The simplest way to explain the concept is if the rate for a similar term to what you have remaining is the same or higher than your current rate at the time you break your mortgage, then you would pay three months’ interest. If it’s lower, you would pay the interest rate differential… if it’s greater than three months’ interest. That explains the concept, however, the actual calculation is not that simple. For a detailed explanation on how this works, please refer to my blog on Mortgage Penalties Explained. 

All of the major banks are harsher penalty lenders, along with some non-bank lenders.  However, most non-bank lenders are considered fair penalty lenders. 

The penalty to break a mortgage with a harsher penalty lender such as a major bank can be as much as 900% higher than most non-bank lenders. This could mean the difference between a $5,000 penalty or a $45,000 penalty. This is an extreme case, and the difference is generally nowhere near as high. But it can be.  A penalty of 2- 5 times that of a fair penalty lender is more common.  

The true cost of your mortgage is hiding in the fine print, not the rate.

 

3. Choose the Right Mortgage Pro (Not Just a Smooth Talker)

Your choice of mortgage professional is one of the most important decisions you’ll need to make. Regardless of whether you choose to work with a mortgage broker or a mortgage specialist at your bank, the position has a relatively low barrier of entry. For this reason, it’s not uncommon to come across individuals who may lack the necessary competence yet label themselves as ‘mortgage specialists.’ 

A mortgage is a huge financial decision, so you don’t want to trust it to just anyone. 

By choosing the wrong person to handle your mortgage for you, you could be putting your deposit at risk. It doesn’t matter if you’re dealing with a licensed mortgage agent or with someone who has a nice big shiny bank logo on their business card. Before entrusting someone with your mortgage needs, it’s essential to thoroughly vet their expertise and experience. 

How do you ensure you’re dealing with the right person? 

Simple. Do your homework. Google them. Stalk their LinkedIn to see how long they have been working in mortgages. Ask detailed questions… and lots of them. If they struggle to answer your questions or have to “get back to you” on everything, run. 

Some mortgage professionals will try to ‘guess’ when they don’t know the answer. This could end up being a nightmare waiting to happen. 

But it’s not just inexperienced mortgage professionals that you need to be looking out for. There are many seasoned mortgage experts that may come across as highly knowledgeable and professional, yet they may not have your best interests in mind.  It’s common for mortgage specialists to be incentivized for selling specific products, or some may result in a higher commission. This can lead to the mortgage professional advising you to take one of the higher commission products, regardless of whether it’s in your best interest or not. In this case, they are putting their own personal gain over yours. 

But this can be your opportunity to trap them. 

Ask them why they are recommending this specific product for your needs. Did they even ask you about your needs and goals? They should be able to clearly and articulately explain why they feel this option is the best choice for you. If they are not able to give you a clear and compelling reason, then it’s possible that they are putting their interests above yours. 

There is a lot of incompetence in this industry, and this applies equally on both the bank and broker side. It’s amazing how little some so-called ‘professionals’ actually know. Bank or broker. Take the time to ask questions about their experience, along with questions about the products. If you know more than they do… then why would you choose them to handle your mortgage for you?  

A seasoned mortgage professional can make educated suggestions, structure your mortgage in a way that matches your goals, and provide strategies to ensure you’re keeping as much of your money in your pocket as possible. The quality of the mortgage agent’s advice alone can save you thousands. Just as the wrong advice can cost you thousands. 

In my book, Beat the Bank – How to Win the Mortgage Game in Canada, I have an entire chapter dedicated to choosing the right mortgage professional, including a list of questions, and pros and cons of dealing with brokers vs. the bank directly. 

 

4. Waiting for Rates to Fall Before Switching Your Mortgage

If you’re sitting on a higher-rate mortgage while rates are falling, don’t wait for the “perfect” rate to make your move. The penalty math doesn’t work that way.

The lower rates go compared to your current rate, the bigger your IRD penalty might become. It’s like a race between the savings and the penalty—and if you wait too long, the penalty wins.

Another big benefit to using PMT Mortgage is that we don’t just disappear after your mortgage closes. We monitor the market for opportunities to save you money and proactively reach out when we see one. If there’s a chance to refinance and save, we’ll let you know. The trick is jumping when the balance between rate savings and penalty is in your favour—not when rates hit their absolute bottom (because by then, it might be too late).

 

5. Make Sure Prepayment Privileges Align with Your Goals 

All mortgages come with prepayment privileges, but some are more generous than others. The common ones are listed as something like 15/15, 20/20, or even 100/15. These numbers refer to how much extra you can pay: the first is the increase to your regular payment, and the second is the annual lump sum percentage you can throw on the balance without penalty.

The part you have to watch out for is the flexibility with your lump sum prepayment privileges. Most lenders will let you make as many lump sum payments as you like within the year, providing they fall on a scheduled payment date. This is the type of flexibility you need if you’re looking to aggressively pay down your mortgage. 

However, some lenders restrict you to a single lump sum payment per year. For instance, they might permit a maximum annual lump sum of $100,000, but if you make a single payment of $5,000, they won’t allow any further payments until the following year. This limitation means you would miss the chance to utilize the remaining $95,000 of your allowable lump sum for that year. 

In this situation, some will wait until they have saved up more money before proceeding with the prepayment. 

For example, let’s say you have $10,000 to prepay towards your mortgage right now, but you’re expecting to accumulate another $30,000 over the next 10 months. As you can only make a single lump sum payment, you may choose to wait until you have the full $40,000 before making the payment. 

If they chose a more flexible lender, they could have applied the $10,000 to the mortgage immediately. Then make additional lump sum payments as soon as they have the funds to do so. Each time, eliminating the interest paid on the prepaid amount. If they wait had to wait for the full 10 months, then they would be paying interest that they could have otherwise eliminated with a more flexible lender. 

If you plan on aggressively paying down your mortgage, then always take the time to ask about the lender’s prepayment privileges, particularly if there are any restrictions on the allowable frequency of the lump sum payments. 

 

Final Thoughts

Too many Canadians treat mortgages like they’re picking between brands of sugar—grab the cheapest one and move on. But if you’re not paying attention to the whole cost of your mortgage, you could be throwing away tens of thousands of dollars over time.

Rate matters—but it’s only part of the puzzle. The right mortgage strategy, structure, and advice can make all the difference. And at PMT Mortgage, that’s exactly what we offer: competitive rates and the guidance to make sure your mortgage is actually working for you, not the bank.

The lowest rate won’t mean much if it comes with the highest penalty, poor flexibility, or bad advice. There is a lot more to saving money on your mortgage than just the rate itself.