Joel DyckReal Broker SK Ltd.
Saskatoon · From the topic map

What is a mortgage point and what does it cost?

A mortgage point is a fee equal to 1 percent of your loan amount, paid upfront to your lender in exchange for a lower interest rate over the life of the mortgage. On a $400,000 mortgage, one point costs $4,000, and the rate reduction it buys varies by lender, independent of CMHC's insured-mortgage minimum credit score of 600.

Whether a point is worth buying depends on how long you plan to keep the mortgage at that rate. Since Canadian mortgages typically run in 5-year terms with semi-annual compounding, a point only pays for itself if the monthly savings over that term exceed the upfront cost.

A mortgage broker can calculate your specific break-even point before you commit, factoring in your actual rate, term and amortization rather than a generic rule of thumb that may not fit your loan.

Ask your broker for the break-even math before buying a point. Get your hand-reviewed valuation from Joel Dyck.

Get your hand-reviewed valuation from Joel Dyck.

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