A higher mortgage payment at renewal can be stressful, but you usually have more options than simply accepting the first offer from your current lender.
If your mortgage is coming up for renewal in Canada, this is a good time to review your rate, payment, amortization, and overall budget before signing a new term.
Quick Answer
If your mortgage payment is going up at renewal, start by comparing your lender’s offer with other available mortgage options. You may be able to negotiate a better rate, switch lenders, choose a different term, or adjust your amortization.
The right choice depends on your budget, remaining mortgage balance, and long-term plans.
1. Do Not Automatically Accept Your Renewal Offer
Your current lender will usually send you a renewal statement before your mortgage term ends.
If you simply sign it without comparing options, you may miss a better rate or mortgage structure elsewhere.
The Financial Consumer Agency of Canada recommends shopping around a few months before renewal rather than waiting until the last minute.
2. Ask Your Current Lender for a Better Rate
The rate in your renewal letter is not necessarily the best rate your lender can offer.
If you have found a better option through another lender or mortgage broker, ask your current lender whether they can match or improve their offer.
Even a relatively small difference in interest rate can affect your monthly payment and total interest cost.
3. Consider Switching Mortgage Lenders
You do not have to stay with the same lender when your mortgage renews.
Another lender may offer a better interest rate, term, payment structure, or mortgage features. You will need to qualify with the new lender, and there may be appraisal, legal, discharge, or transfer costs, although some lenders may cover certain switching expenses.
This is why it is worth comparing the total cost rather than looking only at the advertised rate.
4. Look at a Different Mortgage Term
Renewal is also an opportunity to reconsider your mortgage strategy.
You may decide that a shorter or longer fixed term makes more sense, or you may want to compare fixed and variable rate options.
Think about your plans for the next few years. Are you likely to sell, move, refinance, or make significant extra payments?
The lowest rate is not always the best mortgage if the terms do not fit your plans.
5. Consider Extending Your Amortization Carefully
Extending the amount of time remaining on your mortgage can reduce your regular payment.
For example, spreading the remaining balance over a longer amortization may make a payment increase easier to manage.
However, there is an important tradeoff. A longer amortization generally means paying more interest over the life of the mortgage. FCAC specifically cautions borrowers to consider the long term interest cost before extending amortization simply to lower payments.
6. Review Your Payment Frequency
Renewal is a good time to review how often you make mortgage payments.
Depending on your lender, options may include:
- Monthly
- Semi monthly
- Biweekly
- Accelerated biweekly
- Weekly
- Accelerated weekly
Accelerated payment schedules can help pay a mortgage down faster, but they also require a little more room in your budget.
7. Make a Lump Sum Payment If It Makes Sense
If you have savings available, reducing your mortgage balance before or at renewal can lower the amount that needs to be financed at the new interest rate.
Many mortgages include prepayment privileges that allow borrowers to make additional payments without penalty, although the rules differ by mortgage contract.
Do not drain your emergency savings simply to reduce your mortgage. Look at your broader financial situation first.
8. Talk to Someone Early If the New Payment Is Unaffordable
If the projected payment is going to put serious pressure on your household budget, do not wait until you miss a payment.
Contact your lender or mortgage professional before renewal.
Federally regulated financial institutions are expected to work with mortgage borrowers experiencing financial difficulty and consider appropriate relief measures based on their circumstances.
The earlier you start the conversation, the more time you have to explore your options.
How Early Should You Start Preparing for Mortgage Renewal?
Ideally, start reviewing your mortgage several months before the renewal date.
That gives you time to:
- Compare rates
- Review your budget
- Speak with your lender
- Explore other lenders
- Gather documents if you decide to switch
- Consider different terms and amortizations
Waiting until the final week can limit your choices.
A Higher Payment Does Not Mean You Are Out of Options
Mortgage renewal is more than signing another contract with your existing lender.
It is an opportunity to look at your current financial situation and make sure your mortgage still fits your needs.
If your payment is expected to increase, compare your options before making a decision. A mortgage professional can help you review rates, lenders, terms, and payment strategies so you can understand what is available before your renewal date.