TL;DR
A lower headline rate can still become the higher-cost decision if your plans change and contract flexibility is limited.
What this FAQ answers
Borrowers usually compare day-one rates. The real decision is total cost plus exit flexibility across your likely scenarios.
This page combines rules and execution guidance so you can choose a mortgage contract that works both now and under downside conditions.
What is a bona fide sale clause mortgage?
In practice, this restriction appears in some lower-rate mortgage offers. The tradeoff is a sharper initial rate in exchange for tighter exit paths if you need to change course before term end.
FCAC guidance emphasizes checking portability, prepayment privileges, penalties, and restrictions before commitment.
Where borrowers get trapped: rate vs flexibility
| Offer type | What you usually get | What you give up | Best fit |
|---|---|---|---|
| Restricted low-rate fixed | Lower headline rate at signing | Tighter break, switch, or refinance options | Borrowers with high certainty they will not pivot |
| Standard full-feature fixed | Balanced rate with clearer portability/prepayment features | Slightly higher rate in many files | Borrowers valuing flexibility |
| High-flexibility structure | Easier adaptation to life or strategy changes | Often the highest day-one pricing | Borrowers with uncertain timelines |
Three offers to benchmark before signing
| Offer profile | Rate appeal | Exit flexibility | Main borrower risk |
|---|---|---|---|
| Restricted low-rate fixed | High | Low to medium | Unexpected life change forces expensive workaround |
| Standard full-feature fixed | Medium | Medium to high | Paying slightly more now to buy flexibility protection |
| Open or high-flex option | Low | High | Overpaying if you do not need near-term flexibility |
72-hour decision scorecard
- Write your top two likely change scenarios before term end.
- Model break cost and feasibility under each scenario.
- Confirm exact prepayment and portability rules in writing.
- Verify whether refinance paths are restricted by contract terms.
- Select the option that remains workable if your highest-risk scenario happens.
Psychology traps that create low-rate regret
| Mental model | Common trap | Pragmatic correction |
|---|---|---|
| Anchoring | Fixating on headline rate and ignoring contract constraints | Compare all-in outcomes under at least one early-change scenario |
| Present bias | Prioritizing immediate payment savings over future optionality | Price flexibility as insurance before signing |
| Optimism bias | Assuming no life or financing changes will occur during term | Stress-test a realistic change event before commitment |
| Regret aversion | Avoiding hard questions to preserve momentum | Use the written scorecard and require explicit lender confirmation |
Sources
Best next step
- Use the mortgage penalty FAQ to model exit cost mechanics.
- Run the penalty estimator before choosing low-rate restrictions.
- Review refinance vs renew vs switch scenarios for flexibility planning.
- Start a pre-approval plan with written contract checks.
