Mortgage Blog

All the Ways to Save on Your Mortgage in Canada

December 16, 2025 | Posted by: Sarabjit Dhuna

For most Canadians, a mortgage is the largest financial obligation they’ll ever take on. While interest rates and home prices matter, how you structure and manage your mortgage can save you tens of thousands of dollars over time. From choosing the right lender to making smart payment decisions, here are all the key ways to save on your mortgage in Canada.

1. Improve Your Credit Score Before Applying

Your credit score plays a major role in the rate and terms you’re offered.

How to save:

  • Pay all bills on time

  • Keep credit card balances low (under 30% utilization)

  • Avoid applying for new credit before your mortgage

  • Correct errors on your credit report

A stronger credit profile often means lower interest rates and better lender options.

2. Shop Around — Use a Mortgage Broker

Rates and terms can vary significantly between lenders.

Why this saves money:

  • Brokers compare banks, credit unions, and monoline lenders

  • You may access lower rates not advertised by major banks

  • Brokers help negotiate terms and explain penalties

Even a slightly lower rate can result in major long-term savings.

3. Choose the Right Mortgage Type (Not Just the Lowest Rate)

The cheapest rate isn’t always the cheapest mortgage.

Key decisions that impact cost:

  • Fixed vs. variable rate mortgages

  • Open vs. closed mortgages

  • Shorter vs. longer terms

A mortgage with better prepayment options or lower penalties may save more over time than one with the lowest headline rate.

4. Increase Your Down Payment (When Possible)

A larger down payment reduces how much you borrow—and how much interest you pay.

Additional benefits:

  • Avoid or reduce CMHC mortgage insurance

  • Lower monthly payments

  • Greater equity from day one

If you put down 20% or more, you’ll avoid default mortgage insurance altogether.

5. Minimize CMHC Mortgage Insurance Costs

If your down payment is less than 20%, mortgage insurance is required.

Ways to save:

  • Increase your down payment slightly to lower insurance premiums

  • Choose a shorter amortization (when affordable)

  • Refinance later once you reach 20% equity

CMHC premiums can add thousands to your total mortgage cost.

6. Choose a Shorter Amortization (If You Can Afford It)

While 25–30-year amortizations lower monthly payments, they increase total interest paid.

How this saves money:

  • Less interest over the life of the loan

  • Faster equity buildup

  • Better long-term financial flexibility

Even moving from 30 years to 25 years can save a significant amount.

7. Use Accelerated or Biweekly Payments

Payment frequency matters more than many Canadians realize.

Smart strategies:

  • Switch to accelerated biweekly payments

  • Make weekly or accelerated weekly payments

  • Match payments to your pay schedule

These options reduce interest and shorten your mortgage without feeling like a large extra payment.

8. Take Advantage of Prepayment Privileges

Most Canadian mortgages allow prepayments without penalties.

Ways to use them:

  • Make lump-sum payments (bonuses, tax refunds)

  • Increase regular payment amounts

  • Apply extra funds directly to principal

Using these features can cut years off your mortgage and save thousands in interest.

9. Be Careful With Mortgage Penalties

Breaking a mortgage early can be costly—especially with fixed-rate loans at major banks.

How to avoid high penalties:

  • Understand how penalties are calculated

  • Consider variable-rate mortgages (often lower penalties)

  • Choose lenders with more transparent penalty structures

  • Ensure your mortgage is portable if you plan to move

A lower penalty mortgage can save you a lot if your plans change.

10. Refinance Strategically

Refinancing can help you save—but only if the math works.

Refinancing may help you:

  • Secure a lower interest rate

  • Consolidate high-interest debt

  • Remove mortgage insurance

  • Adjust your amortization

Always factor in fees, penalties, and how long you’ll stay in the home.

11. Pass the Stress Test — But Don’t Overextend

Canada’s mortgage stress test ensures you can handle higher rates, but just because you qualify doesn’t mean you should max out your budget.

How this saves money:

  • Lower mortgage = less interest paid

  • More room for extra payments

  • Less financial stress if rates rise

Borrowing responsibly protects your long-term finances.

12. Review Your Mortgage at Renewal — Not Just Rate Shop

Many Canadians overpay simply by auto-renewing.

At renewal time:

  • Compare offers from multiple lenders

  • Renegotiate terms and features

  • Adjust amortization or payment frequency

Renewal is one of the best opportunities to save—don’t miss it.

Final Thoughts

Saving on your mortgage in Canada isn’t about one single decision. It’s about choosing the right structure, using the features available to you, and reviewing your mortgage regularly. Small adjustments—like payment frequency, prepayments, or refinancing at the right time—can make a massive difference over the life of your loan.

A well-planned mortgage doesn’t just help you buy a home—it helps you build wealth.

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