How to do rate shopping for mortgages
Rate shopping for mortgages means obtaining and comparing written lender offers so you can choose financing that meets your goals. Start this task when you are buying, approaching a renewal, planning a refinance, or within six months of a major life change such as a renovation or an income change. Government guidance urges borrowers to compare products and features so the mortgage fits your needs, not only the lowest headline rate (Canada.ca guidance on choosing a mortgage). Recent Canadian data also shows many borrowers hold five-year fixed terms, so renewals and switches are common decision points (FCAC data story).
Step 1 gather documents and set clear goals
Before you request quotes, assemble the exact documents lenders will ask for and decide your priority. Common objectives are lower monthly payment, shorter amortization, or accessing home equity. Having files ready makes quotes faster and directly comparable.
- Photo ID and Social Insurance Number.
- Recent pay stubs and two years of T4 slips, or two years of Notices of Assessment if self-employed.
- Employment letter or contract when applicable.
- Recent bank statements and a summary of debts such as credit cards and lines of credit.
- Current mortgage statement showing balance, term and maturity date when renewing.
- Property tax bills and condo fee statements if relevant.
Convert your objective into measurable outcomes such as “reduce monthly payment by $200” or “keep amortization at 20 years or less.” MiiGrowth provides an Affordability Calculator and Instant Eligibility screening to help set realistic goals and prepare documents (MiiGrowth tools).
Step 2 check eligibility and get a preapproval or rate indication
A preapproval or eligibility check improves your negotiating power and produces comparable figures from lenders. A preapproval is an assessment based on your submitted income, assets and credit. It is not a final approval because the lender will still verify documentation and the property before funding. Canada.ca explains why different lenders have different conditions and why preapproval helps you compare like with like (Canada.ca on preapproval).
Start with a soft Instant Eligibility screen when you want quick feedback without a hard credit pull. When you are ready to firm up a quote, request a formal preapproval and confirm whether the lender will run a hard or soft credit check. Knowing this avoids surprises for credit-sensitive borrowers. MiiGrowth’s Instant Eligibility tool is a practical first step for Southern Ontario borrowers (MiiGrowth Instant Eligibility).
Step 3 request comparable quotes from at least three sources
Contact your current lender, at least one major bank or credit union, and a licensed mortgage broker or alternative lender. Getting multiple written quotes increases your leverage and makes it easier to spot differences in fees, APR and prepayment options. Consumer advice recommends comparing offers from several lenders to understand the total cost of credit (FTC shopping for a mortgage).
Give every lender the same facts and ask the same questions so quotes are directly comparable. Use this short script and the checklist of questions below.
- Script: "I am rate shopping for mortgages. Please provide a written quote showing contract rate, APR, term, amortization, all lender fees, appraisal and legal estimates, and prepayment options."
- Questions to ask: contract interest rate, APR, fixed or variable, term length, amortization used for the calculation, all upfront fees, appraisal and legal cost estimates, portability, and prepayment penalty method.
Step 4 compare apples to apples: interest rate, APR, fees and features
Do not compare only the headline interest rates. APR and total fees show the actual cost. The APR captures interest plus some fees and helps compare lenders when one charges higher upfront fees and another has a slightly lower nominal rate (FTC).
What APR means
APR stands for annual percentage rate. It is intended to give a more complete picture of borrowing cost by combining interest and certain fees. APR is useful when one lender offers a low rate but charges large upfront fees while another charges a higher rate and lower fees.
Fixed versus variable behaviour
Fixed rates stay the same for the term, while variable rates can rise or fall. Canada.ca advises borrowers to consider how much of an increase in mortgage payments they could afford if variable rates rise when choosing between rate types (Canada.ca on interest types).
Key comparison items:
- Contract rate versus advertised or posted rate, and whether the quoted rate is conditional.
- APR to capture upfront fees and comparable cost across lenders.
- Amortization used to produce the monthly payment.
- Prepayment privileges including annual lump sum limits, portability, and open versus closed options.
- Mandatory lender fees such as appraisal, legal, administration and discharge fees.
Step 5 check prepayment penalties, portability and renewal details
Prepayment penalties and portability affect the attractiveness of switching lenders or renewing. Confirm penalty calculations and portability clauses before proceeding. Many penalties are calculated as either three months' interest or an interest rate differential, and the exact method matters for the cost calculation.
Stop point: if the break-even time, which is the number of months needed to recoup switching costs with monthly savings, is longer than the time you expect to stay in the home or the planning horizon for your mortgage, do not switch.
Step 6 calculate true cost and break-even before you switch
Use the following inputs and steps to compute the break-even.
- Inputs: current monthly payment, new quoted monthly payment, prepayment penalty amount, appraisal and legal fees, discharge and registration fees, and any lender incentive or cashback.
- Compute monthly savings: current payment minus new payment.
- Add one-time switching costs: penalty plus fees.
- Divide one-time costs by monthly savings to get break-even months.
Example: if switching saves $150 per month and costs $6,000 in penalties and fees, break-even = 6000 / 150 = 40 months. If you expect to move or refinance in 24 months, switching would not be cost effective.
Use mortgage and affordability calculators to test scenarios. MiiGrowth’s calculators make it quicker to validate numbers and see how changes in amortization or term affect monthly payments (MiiGrowth calculators).
Step 7 decide, negotiate, or renew and a short checklist of when not to switch
Once you have competitive written quotes, you can present them to your current lender to negotiate or accept a new offer. Use these negotiation prompts and follow the safety checklist before signing.
- Negotiation prompts: show the written competitor quote and ask if your lender will match or improve the rate, request a waiver or reduction of appraisal and admin fees, and ask for improved prepayment privileges or portability if you plan to move.
- When not to switch: the total of prepayment penalty and fees is greater than projected savings over your planning horizon; your documentation or income verification is incomplete; you plan to sell or refinance within a period shorter than the break-even months; or a quoted rate lacks clear written terms.
When you decide to switch, make sure you receive written confirmation of the agreed rate, term, APR and all fees before breaking your current mortgage. Canada.ca reminds borrowers that switching lenders after signing a mortgage contract can trigger costs and conditions that matter to your final choice (Canada.ca).
If you want local, licensed help, MiiGrowth serves Southern Ontario borrowers and is FSRA licensed under Mortgage Alliance. MiiGrowth can run an Instant Eligibility check, provide calculators and request written, comparable quotes on your behalf. For a no-obligation local quote or to start a formal preapproval, request a quote through the MiiGrowth contact page (MiiGrowth contact) or explore tools at the MiiGrowth homepage (MiiGrowth).
Frequently asked questions
What is rate shopping for mortgages and why does it matter
Rate shopping for mortgages means getting multiple written quotes so you can compare true cost, APR, fees and features. It matters because lenders differ and the lowest headline rate may not be the cheapest after fees and penalties are included. Government guidance stresses comparing products that suit your needs rather than only chasing rates (Canada.ca).
How many lender quotes should I get when rate shopping for mortgages
Get at least three: your current lender, a major bank or credit union, and a licensed mortgage broker or alternative lender. More quotes increase your leverage and make it easier to find competitive APR and features (FTC).
Does getting preapproval or multiple quotes hurt my credit
Soft eligibility checks usually do not affect your credit score. A full credit pull for a formal preapproval can leave a hard inquiry. Ask each lender or broker whether the check is soft or hard before consenting. Preapproval helps you compare offers accurately and shows sellers you are a serious buyer (Canada.ca).
What is APR and why should I compare it instead of just the interest rate
APR shows the annual cost of borrowing after accounting for certain fees. Comparing APRs gives a clearer picture of the total cost between lenders with different fee structures. Consumer guidance recommends using APR to compare total credit cost (FTC).
How do prepayment penalties affect whether I should switch or renew my mortgage
Prepayment penalties can offset interest savings from a lower rate. Calculate break-even months by dividing total switching costs by monthly savings. If the break-even is longer than your expected time in the home or planning horizon, do not switch.
Ready to compare local offers or run an eligibility check? MiiGrowth can help you get written quotes, compute break-even, and negotiate with lenders. For local, no-obligation support, request a quote or start a preapproval on the MiiGrowth contact page (MiiGrowth contact).
Last updated August 19, 2026