Overview
With over 60% of Canadian mortgages set to renew in 2025 or 2026, homeowners face a unique and challenging market. Following a period of historically low pandemic-era rates, most renewals will result in higher monthly payments—often by 10% or more—even as interest rates have started to trend downward. Strategic decisions at renewal can help mitigate the financial impact and position you for future savings.
Key Mortgage Renewal Strategies for 2025
1. Start Early and Shop Around
- Begin reviewing your mortgage at least six months before renewal. This gives you time to monitor market rates, compare offers, and negotiate.
- Rate holds are typically available for up to 120 days, letting you lock in a favorable rate if you expect increases.
2. Assess Your Financial Situation
- Review your current interest rate, payment, and principal balance.
- Calculate how a higher rate will impact your monthly budget; payment increases of 10% or more are common, with some fixed-rate renewals facing 15–20% higher payments than in 2024.
- Use online calculators to model different scenarios.
3. Negotiate Your Renewal Offer
- Lenders often send a first offer that may not be their best. Always negotiate, citing lower rates from competitors if applicable.
- Consider switching lenders for a better deal—as of late 2024, federally regulated lenders no longer require a mortgage stress test for straight switches at renewal, making it easier to move without requalifying, provided you do not increase your loan amount or amortization.
4. Consider Mortgage Type and Term
- Variable rates are expected to remain lower than fixed rates in 2025. If your risk tolerance allows, this could mean lower payments, but ensure your budget can handle potential rate increases.
- Shorter terms (1–3 years) are gaining popularity, allowing you to renew sooner if rates decline further.
- If you anticipate moving or selling, a shorter term offers flexibility.
5. Budget for Higher Payments and Adjust Lifestyle
- 73% of renewers plan to reduce discretionary spending to manage higher mortgage costs.
- Some may need to consider more significant adjustments, such as drawing from investments or altering living arrangements.
6. Use Prepayments if Possible
- If you have extra funds, making lump-sum prepayments before renewal can reduce your principal and help offset higher future payments.
Rate and Payment Comparisons
| Mortgage Type | Expected Payment Change at 2025 Renewal | Notes |
|---|
| 5-year Fixed | +15% to +20% | Most common; secured at low pandemic rates |
| Variable Rate (Fixed Payment) | -5% to -7% | Some may see small declines if principal repaid |
| Variable Rate (Adjustable Payment) | Varies | Payment may fluctuate with rate changes |
Major Bank and Lender Practices
- Most major banks will send a renewal offer 30–120 days before your term ends; this is typically negotiable.
- Switching lenders is now simpler due to relaxed stress test rules for straight renewals, opening the door to more competitive offers.
- Some lenders may cover transfer fees to win your business—ask about this when negotiating.
Provincial Variations
- Regulations around renewal and switch fees may differ slightly across provinces; always confirm specific requirements with your lender.
- Housing affordability and payment increases are particularly pronounced in major markets like Vancouver, Toronto, and surrounding regions.
Government Programs and Incentives
- No new federal programs are specific to renewals in 2025, but existing tools like the First-Time Home Buyer Incentive and Home Buyers’ Plan remain available for those moving or refinancing.
- Changes to the mortgage stress test rules now make it easier to switch lenders at renewal without requalifying, provided you do not increase your mortgage amount.
Actionable Next Steps
- Start your renewal shopping process early—ideally six months ahead.
- Compare rates and offers from multiple lenders. Don’t accept your current lender’s first offer.
- Use tools like the Comprehensive Mortgage Payment Calculator to estimate your new payments.
- Negotiate for the best rate and term, considering both your budget and risk tolerance.
- If switching lenders, factor in any potential fees—but remember that many lenders now waive these to attract switchers.
- For a streamlined, competitive, and transparent rate comparison and application process, use theratefinder. Their multi-step application matches Canadians with top lenders for residential, commercial, and construction loans. Begin your personalized mortgage application at theratefinder.ca/onboarding.
Summary
Mortgage renewal in 2025 will likely bring higher payments for most Canadians, especially those coming off low fixed rates. By starting early, shopping widely, and negotiating assertively, you can limit the impact, find a better deal, and position yourself for future flexibility. Utilize new regulatory changes to your advantage and consider lifestyle adjustments to manage increased costs. For expert guidance and the best available rates, use theratefinder to navigate your renewal with confidence.