Less than one-third of Canadian homeowners say they understand how much it costs for a mortgage when they buy a home, according to survey conducted for Manulife Bank of Canada.

“Many people understand that when they buy a $200,000 home, they’ll actually pay $200,000 plus ‘more’ for mortgage interest. What they don’t appear to appreciate is exactly how much that ‘more’ could really cost,” said Roman Fedchyshyn, president and CEO of Manulife Bank of Canada, in a news release.

Seventy per cent of respondents either didn’t know or guessed lower than the actual cost when asked how much they might pay for a $200,000 mortgage at 6%, paid over 25 years. It actually costs more than $385,000, including principal and interest — almost twice the home’s purchase price.

When presented with possible options to help lower their mortgage costs, 39% (the largest single group) believed a lower interest rate is the best answer. A combined half of respondents said the key to paying less interest was making more frequent payments (34%) or the ability to make lump sum payments (16%).

The survey also found almost one quarter of those surveyed did not have any extra money at the end of the month. Of the nearly three-quarters of respondents (73%) who had “extra cash” at the end of the month, 45% actually used it to reduce their debts. The remaining 55% chose to leave their money in a bank account or to invest it somewhere else.

Manulife Bank has developed an online financial calculator to help more Canadian homeowners understand how interest can impact their cost to own a home. Available on manulifeone.ca, this tool compares their current mortgage approach against a combination of alternatives: consolidating debt, using short-term savings to lower their debt, as well as using left-over cash to lower their costs.

The Maritz Research telephone omnibus poll was conducted between July 27 and August 1. A total of 2,001 Canadians were interviewed.