Comparing a 6.35% five-year fixed mortgage beyond the headline rate

[OrlaIves]

I have a 6.35% quote for a five-year fixed mortgage on a Toronto property purchase around C$1,343,000. The advertised rate looked lower, but the arrangement fees and loan-to-value tier changed the comparison.

Would you compare offers using APR, interest paid over the five-year term, or total cash cost including fees? The monthly difference between the leading options is fairly small, so portability and early-repayment terms may be more important. I am also wary of making the decision depend on an assumed refinance rate five years from now.

 

[hana_bloom]

I would compare total cash outlay over the same five-year period: scheduled payments, upfront or financed fees, and the mortgage balance remaining at the end. APR is a useful screening number, but it can hide why one offer fits your plans better. Then price a separate early-exit scenario, because a slightly cheaper mortgage may become expensive if you move before year five.

 

[green_glass]

What down payment and actual mortgage amount are you using? C$1,343,000 is the purchase price, but the loan-to-value tier and whether fees are paid upfront or added to the loan can materially alter the result. I would also ask each lender to illustrate the cost of selling or refinancing after years two and three, using the same assumed dates.

 

[hana.slate]

I would not give portability too much weight without reading the conditions. A mortgage described as portable may still be awkward if the next property, loan amount, timing, or lender approval does not line up. Monthly affordability comes first for me, followed by the early-repayment wording. A theoretical five-year saving is less persuasive if the loan is costly to change.

 

[green_glass]

That is fair, but portability still has value when the rate difference is small; it just should not be treated as guaranteed flexibility. I would make a simple table with three paths: keep the mortgage for five years, move during the term, and make extra repayments. Use identical loan amounts and payment assumptions so the fees and remaining balances are genuinely comparable.

 

[bram_saves]

One more stress test: ignore any forecast that rates will be lower at renewal. Check whether the payment is comfortable now, then model a higher payment after the five-year term using a range of rates rather than one optimistic refinance assumption. For the current offers, ask for the full payment schedule, fee treatment, remaining balance after five years, prepayment provisions, and exact portability conditions in writing.