This excerpt from tax guide T4002-09 should answer your question. For more info see
T4002
Fees, penalties, or bonuses paid for a loan
You can deduct the fee you pay to reduce the interest rate
on your loan. You can also deduct any penalty or bonus a
financial institution charges you to pay off your loan before
it is due. Treat the fee, penalty, or bonus as prepaid interest
and deduct it over the remaining original term of your loan.
For example, if the term of your loan is five years and in the
third year you pay a fee to reduce your interest rate, treat
this fee as a prepaid expense and deduct it over the
remaining term of the loan. For more information, read
"Prepaid expenses" on page 17.
Regards,
Sherilynn