Disclosure Statement

A disclosure statement is a document a lender or mortgage broker must give you that shows the true cost of a mortgage — the interest rate, the annual percentage rate (APR), payment amounts, fees, and the terms that affect what you pay over time. Federally regulated lenders must provide this disclosure before or at the time you enter the mortgage, and again when the mortgage renews.

What a disclosure statement typically contains

The federal cost of borrowing rules require lenders to spell out the deal in plain language. Common items include:

The interest rate, whether it is fixed or variable, and the APR, which folds certain fees into a single comparable figure.
The amount and timing of each payment, the amortization period, and the mortgage term.
Prepayment privileges and the method used to calculate any prepayment penalty if you break the mortgage early.
Fees such as appraisal, origination, and discharge charges, plus whether default insurance applies and who pays for it.

This is separate from the cost of borrowing summary you may also receive, though the two overlap.

Why it matters to a borrower

The contract rate is not the whole cost. Two offers can carry the same headline rate yet differ sharply once fees, penalty formulas, and prepayment limits are counted. The disclosure statement puts those differences on the same page so you can compare:

Offer A: a slightly lower rate, but a higher origination fee and a restrictive prepayment clause.
Offer B: a marginally higher rate, no lender fee, and generous prepayment privileges.

Reading the APR and the penalty wording side by side often reveals that the cheaper-looking rate is not the cheaper mortgage.

Where it fits in the process

The disclosure statement usually arrives with or just after the commitment letter, before you sign. Federally regulated banks and other lenders are supervised by OSFI, while the Financial Consumer Agency of Canada handles consumer protection and complaints about disclosure. Provincial regulators set similar requirements for mortgage brokers. Keep the document — you can check it against your mortgage documents at renewal to confirm the numbers still match.

Frequently asked questions

Is a disclosure statement the same as a commitment letter?

No. A commitment letter confirms the lender's offer to lend on stated conditions. A disclosure statement sets out the cost of borrowing in detail — rate, APR, payments, fees, and penalty terms. Many lenders send them together, or issue the disclosure statement shortly before or at signing. Read both, and ask about anything that is unclear.

Can a lender change the terms after giving me a disclosure statement?

A lender cannot simply substitute worse terms without telling you. If something material changes before funding, such as the rate or fees, you should receive updated disclosure and have the chance to review it. If you believe disclosure was missing or misleading, the Financial Consumer Agency of Canada accepts complaints about federally regulated lenders.

What should I check first on a disclosure statement?

Confirm the rate type and APR, the payment amount and frequency, the term and amortization, and every fee listed. Then look closely at the prepayment penalty wording, since that is where costs vary most between lenders. Comparing the APR and penalty language across offers is usually more useful than comparing the headline rate alone.