New agents often read a rate sheet the way they would read a menu: find the term, find the number. That habit causes mistakes. A lender's rate sheet is organised first by insurance category — insured, insurable, uninsured — because that category, covered in this course's earlier module, sets the funding cost before term is even considered. Within a category it is organised again by loan-to-value band, because a 65% LTV file and a 95% LTV file are different risks to the same lender even at the identical rate on paper.
Only inside that grid do you find the familiar columns: 1-year, 3-year, 5-year, fixed and variable. A common early mistake is to quote a client the best-looking number on the sheet without first confirming which insurance category and LTV band the file will actually land in. The number was real; it just was not theirs.
Four separate choices get bundled into the word product, and it helps to keep them apart.
Fixed vs. variable is about how the interest rate behaves: fixed locks the contract rate for the term; variable moves with the lender's prime rate, though the payment itself may be fixed or adjustable depending on the product. Open vs. closed is about prepayment: an open mortgage can be paid off in full at any time with no penalty and carries a materially higher rate for that flexibility; a closed mortgage is priced lower in exchange for prepayment limits, covered later in this course. A home equity line of credit (HELOC), often bundled with a mortgage as a re-advanceable product, revolves like a credit line rather than amortizing like a loan. OSFI's Guideline B-20 expects the combined limit on this kind of arrangement to stay amortizing and non-revolving above 65% loan-to-value — a ceiling that matters more to file structuring than most agents realise.
This is the one product distinction that quietly costs clients money years after closing, and it belongs in this module because it is set at the rate-sheet stage, not discovered later. A standard charge registers on title for the amount actually borrowed and, in most cases, can be assigned to a new lender at renewal without a full discharge. A collateral charge registers for more than the amount borrowed — sometimes well over 100% of the property's value — to allow future re-advances without a new registration, but it cannot simply be transferred; switching lenders later means a full discharge and new registration, with the legal costs that implies.
Neither structure is wrong. A collateral charge suits a client who plans to draw more equity later. A standard charge suits a client who wants to be free to shop the mortgage at renewal with minimal friction. What is wrong is not knowing which one you are recommending, and why.
The lender pays the broker, not the client, and the client's rate is the same either way — understanding this is the first thing to explain to a new client who assumes a lower rate must exist if the broker were not paid. Compensation from an A lender is typically a finder's fee paid at closing as a percentage of the mortgage amount. Some lenders layer on a volume bonus tied to the total business a brokerage places with them over a period, and a smaller number pay a trailer fee — a small ongoing amount for as long as the client stays with that lender, usually in exchange for a lower upfront fee.
On a B or alternative-lender file, the lender fee disclosed to the client is separate from and in addition to broker compensation; both must be disclosed. Every Canadian province requires brokers to disclose how and by whom they are compensated before the client signs. Treat that disclosure as a floor, not a ceiling — a client who understands how you are paid trusts the recommendation that follows more, not less.
A lender's rate sheet shows an unusually strong rate for a product type your client does not actually qualify for at that loan-to-value. What should you do first?
Rate sheets are structured by insurance category and LTV band before term, so the headline number only applies inside its own cell of that grid. Quoting a rate before confirming the client actually sits in that cell sets an expectation you cannot deliver on, and re-quoting later damages trust more than a careful first answer would have. Lenders do not routinely make manual exceptions to published pricing tiers for individual files.
The intro and first module are free to read. Add your name and email once and the rest of this course opens — along with every other course on the site. No card, no trial.
Already unlocked on another device?
