Your Mortgage Is Renewing in Canada — Don't Sign Yet

Your lender just mailed you a mortgage renewal offer. It looks official. It feels urgent. And that's exactly what they're counting on. Thousands of Canadian homeowners are renewing their mortgages in 2026 - many of them coming off pandemic-era rates as low as 1.99%. What happens next could cost - or save - you tens of thousands of dollars. Before you pick up a pen, read this.

The Renewal Trap Most Canadians Fall Into

Here's the hard truth: your bank is not on your side at renewal time.

When your renewal letter arrives, it typically comes with a pre-filled rate that is rarely their best offer. Banks count on the fact that most homeowners will simply sign and return it - no questions asked. In fact, industry data consistently shows that the majority of Canadians renew with their existing lender without shopping around at all.

That's a very expensive habit.

Even a difference of 0.25% on a $400,000 mortgage can mean paying over $5,000 more over a 5-year term. A 0.50% difference? You're looking at $10,000+ out of your pocket - for the exact same home.

What's Actually Happening With Canadian Rates Right Now

As of early 2026, the Bank of Canada has held its policy rate steady at 2.25% - a significant improvement from the 2023-2024 peak, but still well above the near-zero rates many homeowners locked in during the pandemic.

Here's where the market stands today:

5-Year Fixed Rates: Hovering between 3.80% - 4.50%, depending on lender and borrower profile.
Variable Rates: Currently ranging from 3.50% - 4.20%, with limited upside unless inflation resurges.
Short-Term Fixed (2-3 years): Increasingly popular as a middle-ground strategy for rate flexibility.

Most economists expect rates to remain relatively flat for much of 2026. That makes right now a strategic window - not a moment to panic, but a moment to plan.

The Rule Change That Frees You From Your Current Lender

This is the part most homeowners don't know about - and it's a game changer.

As of late 2024, the mortgage stress test was removed for uninsured borrowers switching lenders at renewal (with no refinancing). What this means in plain English: you no longer need to re-qualify at the higher stress test rate (5.25%+) just to move your mortgage to a competitor offering a better deal.

You are now a free agent at renewal time. Use it.

4 Smart Strategies to Use at Your Next Renewal

1. Start Shopping 120 Days Before Your Renewal Date
Most lenders will hold a rate for you up to 4 months in advance. If rates drop before you close, a broker can usually get you adjusted. If they rise, you're protected. Don't wait for the letter - be proactive.

2. Consider a 2 or 3-Year Fixed Term
If you're nervous about locking in at today's rates for five years, a shorter fixed term protects you from immediate volatility while bringing you back to the table in 2028-2029 - a period when conditions may be more favorable.

3. Negotiate Beyond the Rate
If a lender won't budge on the interest rate, ask for cash back to cover legal fees or appraisal costs. Banks are actively competing for mortgage business right now - use that leverage.

4. Don't Overlook Monoline Lenders
Non-bank lenders like First National and MCAP often offer lower rates than the Big 5 banks - and lower penalties for breaking a mortgage early. A licensed mortgage broker can access these options for you at no direct cost.

What About Payment Shock?

Let's be honest about something that many Canadians are dreading right now.

If you locked in at 1.99% five years ago and you're now renewing closer to 4%, your monthly payment could jump by 15% to 30%. That is a significant cash flow hit - especially with today's cost of living pressures.

One practical option: ask your lender about extending your amortization period. Stretching payments over 25-30 years reduces your monthly obligation, giving you breathing room. Just understand that it increases total interest paid over time - so it's a trade-off worth calculating carefully.

The Best Strategy Depends on Your Situation

Here's the reality: there is no single "best" mortgage renewal strategy that works for every Canadian homeowner.

The right choice depends on your:

Current mortgage balance and remaining amortization
Monthly income and cash flow flexibility
Province and local housing market conditions
Risk tolerance for variable vs. fixed rates
Whether you plan to sell, renovate, or refinance in the next 3-5 years

A homeowner in Toronto renewing a $750,000 mortgage needs a completely different conversation than someone in Halifax renewing $280,000. Location, income, lender history, and credit profile all shape what's possible - and what's optimal.

Where to Go From Here

This is where general advice ends and personalized strategy begins. The tips above give you a strong foundation - but the real savings come from understanding your specific numbers and which lenders are competing for your business in your area right now.

The smartest next step? Search for current mortgage renewal rates, compare lenders, and explore what licensed Canadian mortgage brokers near you are offering. The difference between the first offer you receive and the best offer available could be thousands of dollars over your next term.

You've spent years building equity in your home. Take 30 minutes to protect it.