Hidden Fees and Fine Print: What to Watch for Before You Sign

When it comes to choosing a mortgage, most people focus on one thing — the rate. And while getting a great rate is important, it’s not the whole story.

Some mortgages look like a great deal on paper but come with fine print that can cost you thousands later on — in penalties, restrictions, or missed flexibility.

That’s why I always tell clients: before you sign anything, make sure you understand what you’re agreeing to. Let’s go over a few of the most common “gotchas” to watch for, and how working with a broker can help you avoid them.

1. The Rate Trap: When the Lowest Rate Isn’t the Best Deal

We all love a good deal — and lenders know it. That’s why you’ll sometimes see “ultra-low” rates advertised online that look unbeatable.

But those mortgages often come with restrictions that can make them expensive down the road.

For example, some of these products might:

• Limit your prepayment privileges (or remove them entirely).

• Include higher penalties if you break the mortgage early.

• Restrict you from refinancing or switching to another lender.

• Require you to sell your home to get out (“bona fide sale only” clause).

So while you might save $20 a month in interest, you could pay thousands more in penalties or lose flexibility later.

When I compare rates for clients, I always review the full picture — not just the number on the page — so you can make an informed decision that works long-term.

2. Prepayment Penalties: The Expensive Surprise

Here’s a statistic that surprises a lot of people: Over half of Canadian homeowners break their mortgage before the term is up.

Whether it’s because of a move, a refinance, or a change in life circumstances, it happens — and when it does, penalties can vary dramatically depending on your lender and product.

For example:

• Fixed-rate mortgages often charge the greater of 3 months’ interest or an Interest Rate Differential (IRD) — which can be several thousand dollars.

• Variable-rate mortgages typically charge only 3 months’ interest.

The problem? Many people don’t know the difference until it’s too late.

Before you commit, I’ll show you exactly what your potential penalties would be with each option — so there are no surprises if your plans change.

3. Collateral vs. Standard Charge: Why It Matters

This one doesn’t get talked about enough.

A standard charge mortgage is registered for the exact amount you borrow, which means it’s easier to switch lenders at renewal without legal fees.

A collateral charge mortgage, on the other hand, is often registered for more than your original loan — sometimes up to 125% of your home’s value.

That gives you flexibility to borrow more later (for a line of credit or refinance), but it also makes switching lenders much harder and more expensive.

Neither option is “bad” — it just depends on your goals. I always make sure my clients know which one they’re getting and why, so there are no hidden surprises at renewal.

4. Portability and Flexibility: Planning for Life Changes

Life happens — maybe you’ll want to move before your term ends, buy a cottage, or upgrade homes.

A portable mortgage lets you transfer your rate and terms to a new property, avoiding penalties. But not all mortgages are fully portable, and even those that are might have strict timelines or conditions.

I always look at how flexible your mortgage will be if life changes — because a great mortgage should move with you, not hold you back.

5. The Power of Clarity

At the end of the day, it’s not about chasing the lowest rate — it’s about finding the right mortgage for you. That means balancing rate, flexibility, features, and peace of mind.

When you work with me, I’ll walk you through every term and condition in plain language. No jargon. No fine print surprises.

Together, we’ll find a mortgage that not only fits your budget today — but supports your goals for the future.

Final Thoughts

A mortgage is one of the biggest financial commitments you’ll ever make — and the fine print matters just as much as the rate.

Before you sign anything, reach out to me. I’ll review the details, explain what everything means, and make sure you’re choosing a mortgage that truly works in your favour.

It only takes a few minutes to understand, but it could save you thousands — and a whole lot of stress — down the road.