Here’s a moment I see all the time in Winnipeg: a buyer gets the email they’ve been waiting weeks for — “Congratulations, your mortgage is approved” — with a PDF attached. They skim the rate, see the number they expected, and fire back “looks good!” without reading the rest. That PDF is your mortgage commitment letter, and it’s the single most important document in the whole deal. It’s the contract that spells out exactly what you’re agreeing to for the next several years — the conditions, the penalties, the fine print that decides what happens if life changes.
So before you sign anything, slow down. Here’s a line-by-line checklist of what to look for, in the order you’ll usually find it.
1. The basics — make sure they match your deal
Start at the top. Confirm the borrower name(s), the property address, and the mortgage amount are all correct. Then check the numbers that define your loan:
- Interest rate — and whether it’s fixed or variable. If variable, note whether it’s quoted as “prime minus X” so you know how it moves.
- Term — how long the rate and contract are locked (often 3 or 5 years). This is not the same as your amortization.
- Amortization — the total number of years to pay the mortgage off (commonly 25, or up to 30 if you qualify). This drives your payment size.
- Payment amount and frequency — monthly, biweekly, or accelerated biweekly. The frequency changes how fast you pay down principal.
- Maturity date — the day your term ends and you renew. Circle it.
One typo here — a wrong rate, an amortization that’s shorter than you discussed — can cost you real money. Catch it now, not at the lawyer’s office.
2. The rate hold — how long is your rate guaranteed?
Your commitment letter guarantees your rate until a specific date, usually 90 to 120 days from approval. If your closing lands after that window, the rate can change. If you’re buying a new build months out, or your possession date keeps shifting, this line matters a lot. Confirm the hold covers your actual closing date.
3. Conditions to fund — the homework you still owe
Most approvals are conditional, meaning the lender will only release the money once you’ve handed over certain documents. This is where deals quietly fall apart, because buyers assume “approved” means “done.” It doesn’t. Typical conditions include:
- Recent pay stubs, a letter of employment, or T4s / Notices of Assessment
- Proof of your down payment and where it came from (a 90-day history, plus a gift letter if any is gifted)
- A satisfactory property appraisal
- Proof of home insurance effective on closing day
- Sometimes a signed offer, MLS listing, or condo documents
Look for the deadline attached to these conditions. Every one has a date, and missing it can stall or sink your closing. Get them in early.
4. Prepayment privileges — how much extra can you pay?
This is the good news section, and most people never use it because they don’t know it’s there. Your privileges let you pay the mortgage down faster without penalty, usually in two forms:
- Lump-sum privilege — you can put down a percentage of the original balance each year (often 10–20%).
- Payment-increase privilege — you can raise your regular payment by a set percentage (often up to 15–20%).
A mortgage with 20/20 privileges gives you far more flexibility than one with 10/10. If paying your mortgage off early matters to you — and in this rate environment, it should — these numbers are worth comparing before you sign.
5. The penalty clause — the most expensive line in the letter
If you ever break your mortgage before the term ends — to sell, refinance, or move to another lender — you’ll pay a penalty. And this is where the fine print gets expensive, because not every lender calculates it the same way.
For a closed fixed-rate mortgage, the penalty is usually the greater of two figures: three months’ interest, or the Interest Rate Differential (IRD). The IRD compares your current rate against what the lender could charge on a comparable term today. The catch is which rate they compare against:
- A standard IRD uses the lender’s posted rate.
- A discounted IRD subtracts the discount you originally received — and that math almost always produces a bigger penalty.
For a variable-rate mortgage, the penalty is typically just three months’ interest, which is one reason some borrowers prefer them. Two mortgages at the very same rate can carry wildly different break costs depending on this clause alone. If you think there’s any chance you’ll move or refinance mid-term, ask me to walk through the penalty language before you commit.
6. Portability — can you take this mortgage with you?
A portable mortgage lets you carry your existing rate and terms to a new home if you move mid-term — which can save you a penalty entirely. Check whether the mortgage is portable, and how long you have to complete the port (often 30 to 120 days between selling and buying). If you’re the kind of buyer who might upsize in a couple of years, this feature is gold.
7. Fees, and whether the mortgage is “collateral”
Scan for any lender fees, and note how the mortgage is registered. A collateral charge mortgage can make it easier to borrow more later, but harder and sometimes costlier to switch lenders at renewal. It’s not automatically bad — but you should know which one you’re getting and why.
The bottom line
Your commitment letter isn’t paperwork to rush through — it’s the rulebook for one of the biggest financial commitments you’ll ever make. Read the whole thing. The rate is only one number on a page full of numbers that matter. If anything looks off, or you just want a second set of eyes before you sign, that’s exactly what I’m here for.
Send me your commitment letter and I’ll go through it with you line by line — no charge, no pressure. Call 204-890-2446 or email ted@tedvailas.com and let’s make sure you know exactly what you’re signing.