Total Cost of Borrowing
Quick Definition
The entire amount paid above the principal over the life of a loan.
Full Explanation
Total cost of borrowing refers to all costs paid above and beyond the original principal balance over the entire life of a loan. This includes all interest payments, origination fees, broker fees, insurance premiums (like CMHC), and other charges. For a $400,000 mortgage at 6% amortized over 25 years, the total interest paid is approximately $344,000 — meaning you pay $744,000 for a $400,000 home. Canadian regulations require lenders to disclose the total cost of borrowing under the Cost of Borrowing Regulations (COBR). This figure is the most impactful number for long-term loan decisions.
Related Terms
APR (Annual Percentage Rate)
The true yearly cost of borrowing, including fees and interest.
Amortization
The total length of time to pay off a loan through scheduled payments.
Principal
The original loan amount borrowed, before interest is applied.
Mortgage
A secured loan used to purchase real estate, with the property as collateral.
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