Where the discount is real.
Some physician programs price slightly below posted rates as a relationship play: the bank wants the mortgage, the PLOC, the chequing, and the eventual investment accounts. That discount is real but small, usually in the 10 to 25 basis point range, and it is not universal. On many files a sharp broker can match or beat a bank physician rate by shopping the wider market.
Treating the rate as the whole decision is the trap. Two mortgages at the same rate can differ by tens of thousands of dollars in true cost once you account for penalty type, prepayment privileges, and portability.
Where the value actually sits.
For most physicians, the program is not bought for its rate. It is bought because it lets the file qualify at all, or qualify for far more, than a standard mortgage would allow.
- Projected income qualification, so a resident or fellow can buy at attending-level prices during training.
- Lower down payment options (5-10%) with structured student-debt treatment.
- Corporate income qualification for incorporated attendings, often lifting capacity 50-80%.
- PLOC integration, where the line of credit funds down payment, closing costs, and cash flow.
A 15 basis point rate discount is worth a few hundred dollars a year. Qualifying for the right home, or qualifying at all, is worth far more.
The rate decision that actually costs money.
Most Canadian physicians sign a five-year fixed mortgage at purchase. Five years later the lender mails a renewal letter at its posted rate. Posted renewal rates typically run 30 to 80 basis points above the best available rate a broker can source at the same moment.
Switching lenders at renewal carries no penalty: the original term matures, a new lender discharges and assumes the balance, and the physician takes the better rate. The process is light, handled by the incoming lender and the lawyer.
Frequently asked questions.
Do Canadian physicians get lower mortgage rates?01
Sometimes. Physician programs often offer rate discounts of roughly 10 to 25 basis points versus posted rates, but it is not universal and a broker can frequently match or beat a bank physician rate by shopping the wider market. The larger value of a physician program is qualification flexibility, not the rate.
Is a physician mortgage rate always the best deal?02
No. A bank physician rate is one option among many. The true cost of a mortgage also depends on the penalty type, prepayment privileges, and portability, so the lowest rate is not always the cheapest mortgage.
How much does signing a bank renewal letter cost?03
Posted renewal rates run 30 to 80 basis points above the best available rate. On a $1M mortgage over a five-year term, 50 basis points is roughly $25,000 to $30,000 in extra interest.
Is there a penalty to switch lenders at renewal?04
No. When a mortgage term reaches maturity, switching lenders carries no penalty. The original mortgage discharges cleanly and the new lender assumes the balance at the better rate.