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No Frills Mortgage

Put your hand up if you have so much money left after you pay your monthly bills that it becomes a burden. Does anyone have that problem? Anyone? We most definitely don’t have spare $100 bills clogging up our jean pockets either.

If you’ve done your mortgage homework, you might know by now how important lump sum payments can be in reducing your overall interest and allowing you to pay off your mortgage faster. But sometimes the benefits of lump-sum payment options can result in higher fixed term interest rates. If you know you’re not going to take advantage of these features, why pay more for them?

No-Frills Mortgages

If you take away all of the bells and whistles from a normal fixed rate mortgage product (i.e. prepayment options, payment holidays, etc) then what you end up with is a No-Frills Mortgage.

No Frills Mortgage: a mortgage product with no additional features and very little flexibility. As a result the fixed mortgage rates for No-Frills Mortgages are lower than normal, full-feature mortgage products.

When you do your mortgage shopping you’re bound to come across some of these products. They’ll be the featured rates that seem FAR too low to be true.


Here are a few reasons why you might be tempted by this type of a mortgage:

  • Lower Rates

Actually, that’s pretty much it! Other than a lower rate, no-frills mortgages offer few other benefits.


Be aware of what you’re giving up in for a lower mortgage rate. These products typically come with:

  • Minimal pre-payment privileges
  • Minimal payment top-up options
  • Limited number of pre-payments in a year
  • Quick close deadlines
  • Longer turnaround times on approvals

(This list in not exhaustive and there may be even more drawbacks to a no-frills mortgage product, so be sure to check the fine print)

Is a No-Frills Mortgage Right for You?

Like all things related to your mortgage, the answer to this question depends on your personal situation. If you don’t think you’ll miss the additional features, now or over the course of your mortgage term, then maybe the lower rate is enticing enough for you. On the other hand, it’s really hard to say what life might be like a few years down the road. If you get a promotion, switch jobs, or need to sell your house, the lack of flexibility associated with a no-frills product could cause you a lot of heartaches.

In the current market, you can still get very low mortgage rates on full-feature mortgage products – you can benefit from low rates and keep all of your options open at the same time.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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