What does a mortgage cost over the years I'll own the home, not just the term? (Canada)

In Canada, a mortgage costs you the interest across every term you hold it, plus any penalty if you sell or refinance partway through a term. Over the years you own the home, add the costs of carrying it, such as property tax and home insurance. The rate on your first term is one piece of that; the rates at each renewal, and whether your sale lines up with the end of a term, can matter as much.

What goes into the total

Your term is the contract, often five years; the amortization is the time to pay off the whole loan, often 25 years. Many owners hold a home through more than one term, so the cost runs across several contracts:

1. Interest during the first term. The lender's amortization schedule shows how much of each payment is interest.
2. Interest after each renewal. Nobody knows the future rate, so test a range rather than a single guess.
3. A penalty, if the hold ends mid-term. On a fixed mortgage the penalty is usually the higher of three months' interest or the interest rate differential, and your contract governs (source: Financial Consumer Agency of Canada, checked October 2026).
4. Carrying costs. Property tax, home insurance and condo fees, if any, are paid every year whatever the rate.
5. One-off costs at each end. You pay land transfer tax and legal fees when you buy (see closing costs in Ontario). You pay a discharge fee, legal fees and the costs of selling when you leave.

The part of each payment that repays principal is not a cost. Principal repaid lowers what you owe, and the lower balance is paid off from the sale.

A worked example of a seven-year hold

Illustrative, not a quote. Figures are rounded, and your own rate and costs change them.

You borrow $500,000 over 25 years on a five-year term, and you expect to sell after about seven years.

• The renewal. After five years you owe about $440,000. Say your renewal rate is 1 percentage point higher than your first-term rate. The first year after renewal then costs about $4,300 more (roughly $440,000 × 0.01, a little less as the balance falls during the year). The full five-year renewal term costs about $20,600 more. If the renewal rate is 1 point lower, you save roughly the same.
• The penalty. Renew for another five years and sell two years later, and you owe about $410,000 with three years left. Three months' interest is three times the interest part of a monthly payment. The penalty is then about $1,530 × 3 = about $4,600, or more if the interest rate differential is higher. Renew for a two-year term that ends at the sale, and the penalty is nothing.
• Carrying costs. Say an illustrative $5,500 a year of property tax and $2,000 of home insurance: $7,500 × 7 years = about $52,500, before any increases.
• Principal. Over the seven years you pay the balance down from $500,000 to about $410,000. That $90,000 is not a cost.

A term chosen at renewal to end when you plan to sell can be worth as much as a small difference in the first rate. The lower rate page shows the same effect on a first term.

How to compare two mortgages over the same hold

Put both offers over the same hold, not the same term. Compare the payment, interest to the day you expect to sell, the balance then, and the penalty if the hold ends mid-term. Add the carrying costs. Carrying costs are usually the same for both offers, so carrying costs matter less for the comparison than for your budget.

Then test a renewal rate a point higher and a point lower. The structure that costs less in all three cases is the more robust choice. If the answer flips, the deciding question is how sure you are of the timing.

What to do next

Enter your hold, two structures, property tax and insurance in the total cost of holding tool. The tool's results are estimates only, not an offer or advice. Or use our call-back form and bring your plan, not just the rate.