You have decided on the type of mortgage loan and the features that meet your needs. Here are a few tips to help you get started.

1. Shop around for a mortgage loan interest rate

The following table shows how much you could save on a mortgage loan by negotiating your interest rate. In many cases, you can negotiate a 1% rate discount if you have a very good credit rating.

Assumptions: The mortgage payment decreases as the rate decreases. The initial interest rate is 4.5% per year. The term of the mortgage loan is 25 years.

2. Shop around well in advance

Whether you’re looking to renew your mortgage loan or get a new one, financial institutions will often give you three months in advance to shop around. What’s more, some institutions will allow you to benefit from the better rate between the pre-negotiated rate and the rate available at the time of the new loan.

If you choose a variable rate mortgage, the rate won’t be guaranteed, but the formula for calculating it might be. For example, you could get the financial institution’s prime rate minus 1%, in which case the prime rate may fluctuate, but the formula still applies.

3. Amortize your mortgage loan over a shorter period

The faster you pay down your loan, the less interest you’ll pay. This can save you a lot of money.

For example, if you repay a $200,000 mortgage loan in 20 years instead of 25 years, you would save about $25,250 in interest, assuming an interest rate of 4%.

To be more precise, we should consider the value of money over time. The total amount of interest paid is not the only thing you should consider: ask yourself whether if there’s any benefit to be gained by doing this.

4. If you obtain a lower interest rate, consider continuing with the same payment amount

Let’s assume you have a $200,000 mortgage loan, are paying 5% interest and will be renewing your loan in the near future at a rate of 4% with an amortization period of 20 years.

You are currently paying $603 every two weeks. The 1% rate decrease will bring your payments down to $555. If you decide to continue paying $603, you will save $11,169 in interest and will pay off your mortgage loan 2.3 years earlier.

5. Round up your mortgage loan payment

Let’s say your mortgage payment is $483 every two weeks. Why not pay $500 instead, if you can. You’ll save a lot of interest on your loan!

Savings from rounding up your payment on a $200,000 mortgage loan at an annual rate of 4%

Payments every two weeks	Number of years to repay	Interest paid	Savings
$483	25 years	$114,139	$0
$500	24 years	$106,918	$7,221
$525	22 years	$97,877	$16,262

6. Make lump-sum payments, if possible

Let’s assume you owe $200,000 at an annual interest rate of 4%. You plan to repay the loan over 25 years. If you prepay $1,000, you’ll save $1,657 in interest over the life of your loan.

7. Don’t pay for mortgage insurance twice

Mortgage loan insurance is insurance that protects your lender in the event you’re no longer able to repay your loan. You pay for the insurance in a single instalment, but you can add this cost to your mortgage loan (except for the tax).

When you change lenders, if your loan amount and amortization period don’t increase, you could avoid paying a new mortgage insurance premium. Ask your former lender for the insurance certificate number and give it to your new lender so that the new lender knows you’ve already paid for mortgage insurance.

8. Limit the penalties

Financial institutions generally permit you to repay a portion of the borrowed amount without penalty. Before taking steps to break your mortgage loan and paying the applicable penalty, see if you can pay the permitted amount without penalty.