Rate Gap Cost Calculator
Rate Gap Cost is the estimated extra interest you may pay when your Canadian mortgage quote is above a reasonable benchmark. Even a small gap can add up over a renewal term.
Quick formula
A simple first-pass estimate is:
This is not a full amortization calculation. It is a fast way to understand why a quote that looks only slightly high can still matter.
Simple examples
| Mortgage balance | Rate gap | Simple annual estimate |
|---|---|---|
| CA$300,000 | 0.25% | about CA$750 per year before compounding and amortization effects |
| CA$500,000 | 0.25% | about CA$1,250 per year before compounding and amortization effects |
| CA$750,000 | 0.25% | about CA$1,875 per year before compounding and amortization effects |
| CA$500,000 | 0.50% | about CA$2,500 per year before compounding and amortization effects |
What changes the true cost?
The true cost depends on the mortgage balance, rate type, term length, payment frequency, amortization, fees, penalties, prepayment flexibility, and whether switching lenders creates extra costs.
That is why the FairRate report does more than show a simple formula. It turns the quote into a practical before-you-sign review.
Related FairRate pages
Calculate your real quote gap
Enter your actual quote and mortgage details to get a FairRate Canada verdict and report options.
Check My Rate Gap →Regulatory Disclaimer: FairRate is an independent information and education tool. We are not a mortgage broker, lender, or financial advisor and are not licensed under any provincial mortgage brokering legislation, including the Mortgage Brokerages, Lenders and Administrators Act (Ontario) or equivalent provincial statutes. We do not arrange mortgages, solicit mortgage applications, assess borrower eligibility, or provide credit of any kind. Rate benchmarks are sourced from Bank of Canada published data and are for informational purposes only. They do not represent a guaranteed rate, a rate offer, or financial advice. Results may not reflect your specific lender, credit profile, or market conditions at time of application. Always consult a licensed mortgage professional before making any mortgage decision.