Comparing a 6.08% 20-year fixed quote on a C$1,721,000 Toronto purchase

[cairn.common]

Monthly affordability has to work without assuming I can refinance onto a better deal later. Against that constraint, I am assessing a 6.08% quote fixed for 20 years on a Toronto purchase of about C$1,721,000. The headline offer looked cheaper, but fees and the applicable loan-to-value band produced a less attractive result.

Should competing offers be lined up by APR, by interest paid during the period I expect to keep the mortgage, or by all cash outlay over that same period? I also want to test portability and early-payment charges under realistic sale or refinance scenarios rather than rely on broad product descriptions.

 

[FirstBrick]

The remaining balance at the point you might leave is the detail that changed how I would compare these offers. APR is a convenient screening number, but it can favour a loan that looks cheap over 20 years even if fees and an early exit make it expensive for your actual plans.

Pick two or three plausible exit dates and calculate the payments, upfront fees, repayment charge and balance still owed for each offer. That gives you a common basis without pretending you already know exactly how long the mortgage will remain in place.

 

[FirstBrick]

The missing number is the actual mortgage amount or down payment. Since the loan-to-value tier affected the quote, two offers cannot be compared properly without confirming that both lenders used exactly the same property value, down payment and financed amount.

 

[FirstBrick]

Also ask for the early-repayment cost under specific examples rather than relying on a description such as “portable” or “flexible.” What happens if you sell, refinance, or move the loan to a cheaper property? Portability may matter, but only if the conditions match what you might actually do.

 

[walksAndWay]

I wouldn’t dismiss the long fixed period merely because it costs more. It is buying protection from rate resets, and that protection may have value if the payment is comfortably affordable. The real concern is the broker simultaneously presenting a 20-year fix and suggesting you will refinance. If refinancing is central to the pitch, the exit terms deserve as much attention as the rate.

 

[selma_hart]

First confirm that the paperwork genuinely says a 20-year fixed mortgage term, rather than a shorter fixed term with a 20-year amortization. Those are very different comparisons. The wording in conversation can become blurred, so I’d use the written payment schedule and maturity date.

 

[walksAndWay]

Good point. If it is genuinely fixed for 20 years, I’d still request shorter-term alternatives and compare them over one common time horizon. For the shorter options, model several possible renewal rates rather than assuming today’s rate continues. For the 20-year option, model an early exit so the trade-off is visible.

 

[yuki_hope]

Check how the arrangement fee is paid. A fee due in cash affects closing funds; a fee added to the mortgage also changes the balance on which payments are calculated. A simple spreadsheet should separate the down payment, upfront fees, monthly payments, lump-sum costs and balance remaining at the end of each comparison period.

 

[walksAndWay]

I’d ask each lender for the same written set of figures: starting principal, payment schedule, every fee, total paid over your chosen comparison period, balance remaining then, early-repayment calculation and portability conditions. That prevents the advertised rate from dominating the decision when the actual loan-to-value tier produces a different offer.

 

[FirstBrick]

APR alone would not settle it for me. Run at least three scenarios: keep the mortgage for the entire fixed period, sell partway through, and refinance if rates become attractive. The best quote can change between those scenarios. If one lender will not provide enough detail to calculate them, that itself makes the comparison harder.

 

[yuki_hope]

The quote should be affordable even if refinancing never becomes worthwhile or available on acceptable terms. I’d test the monthly payment against your normal budget, leave room for ownership costs, and then decide how much extra the long-term rate certainty is worth. Treat a future refinance as an option, not the plan that makes today’s numbers work.