Roughly 60% of Canadian mortgages coming up for renewal in 2025 and 2026 are facing a payment increase — many locked in years ago at rates well below 2%, now renewing into a materially different rate environment. This isn't a US-style one-time closing; it's something every Canadian mortgage holder goes through repeatedly, and the planning around it matters as much as the original purchase decision.
What Actually Happens at Renewal
Your 5-year term ends. Your lender sends a renewal offer, usually 30-120 days before the term expires. At that point you have three real choices: accept the offer as-is, negotiate or shop for a better rate with the same lender, or switch lenders entirely — all against your current, already-reduced balance and remaining amortization, not the original loan amount from years earlier.
The Rule That Changed the Game
As of November 2024, switching lenders at renewal is exempt from the mortgage stress test — provided your balance doesn't increase and your amortization doesn't extend. Before this rule, many borrowers felt stuck with their existing lender's renewal offer, because they couldn't pass the stress test at today's higher qualifying rates even though they'd been paying reliably for years. Now, straight switches let you shop the market freely.
Worked Example: The Payment Shock
A borrower who locked a 5-year fixed at 1.89% in 2021 on a $500,000 loan, renewing in 2026 into a 3.99% rate on their remaining balance of roughly $430,000 (25-year original amortization, 20 years remaining):
| 2021 Term | 2026 Renewal | |
|---|---|---|
| Rate | 1.89% | 3.99% |
| Remaining balance | $500,000 | ~$430,000 |
| Remaining amortization | 25 years | 20 years |
| Monthly Payment | ≈ $2,075 | ≈ $2,545 |
Even with a smaller balance, the rate jump alone adds roughly $470/month here — a real illustration of why the Bank of Canada has flagged rising debt-service ratios specifically among this renewal cohort.
Common Mistakes
Borrowers frequently accept the first renewal offer their lender sends without shopping it — lenders' initial renewal rates aren't always their most competitive, and a five-minute call asking for a better rate, or a quote from a broker, can meaningfully change the offer.
Borrowers also wait until the renewal date itself to start planning. Rates can be locked in advance of renewal — often 90-120 days out — which means starting the shopping process a full quarter before your term ends can capture a better rate if the market moves in your favor during that window.
A third mistake: not distinguishing a "switch" from a "refinance." A straight switch (same balance, same amortization, new lender) skips the stress test under the November 2024 rule. Increasing your balance or extending your amortization at the same time turns it into a refinance, which does require re-qualifying under the stress test.
Where This Planner Has Limits
It can't predict future rate environments — every renewal projection is based on current market rates, which may look very different by the time your specific term actually ends. It also can't account for prepayment penalties if you're breaking a term early rather than renewing at the natural end date; that's a materially different calculation.
Frequently Asked Questions
Do I have to renew with my current lender?
No — you're free to switch lenders at renewal, and since November 2024, straight switches skip the stress test entirely.
When should I start shopping for my renewal rate?
Most brokers recommend starting 90-120 days before your term ends, since many lenders allow rate holds in that window.
Does renewing reset my amortization?
Not unless you choose to extend it — a standard renewal continues on your existing remaining amortization schedule.
What if I want to increase my mortgage at renewal (a blend-and-extend or refinance)?
That's treated as a refinance, not a straight switch, and does require passing the current stress test.
Is there a penalty for not renewing on time?
If you don't act, most lenders roll you into a default rate or short-term rate automatically, which is typically higher than a negotiated renewal — it's worth actively renewing rather than letting it lapse.
Related Tools
Mortgage Calculator · Stress Test Calculator · Prepayment Calculator
Educational content, not financial advice. Renewal rules, rates, and stress test exemptions are set by OSFI and individual lenders and can change — confirm your specific renewal options with your lender or a licensed mortgage broker. Written by the MortgagePro Global team.