Overview
Mortgage renewals in 2025 present both challenges and opportunities for Canadian homeowners. With over 60% of mortgages set to renew by the end of 2026 and a higher interest rate environment compared to the pandemic years, strategic planning is essential to manage payment increases and secure the best terms.
Key Mortgage Renewal Strategies for 2025
1. Start Early and Compare Rates
- Begin your renewal process as early as six months before your maturity date to maximize your options and negotiating power.
- Lenders often provide rate holds of up to 120 days, allowing you to lock in a favourable rate if rates rise, or reassess if rates fall before your renewal.
- Use platforms like theratefinder to compare rates from top Canadian lenders, including residential, commercial, and construction loans, and start your application at theratefinder.ca/onboarding/email.
2. Assess Your Financial Situation and Goals
- Review your current financial position, expected changes in income, and upcoming expenses.
- Consider whether you need to refinance for renovations, consolidate debt, or change your mortgage term or amortization.
- Use a mortgage calculator to forecast potential payment increases with new rates.
3. Weigh Fixed vs. Variable and Term Length
- Fixed-rate renewals: Expect rates in the 3–4% range, providing stability but less flexibility if rates fall.
- Variable rate renewals: May offer lower initial rates, but carry risk if rates don’t decrease as projected.
- Shorter-term mortgages: Increasingly popular, these provide flexibility to renew sooner and potentially benefit from future rate drops.
| Term Type | Typical 2025 Rate | Pros | Cons |
|---|
| 5-Year Fixed | 3.5%–4.0% | Payment stability | Locked in at higher rates if they fall |
| 3-Year Fixed | 3.0%–3.7% | Flexibility, moderate rate | More frequent renewals |
| Variable | 2.7%–3.5% | Potential savings | Risk if rates rise or stay elevated |
4. Use Prepayments to Lower Principal
- Making lump-sum payments or increasing regular payments before renewal reduces your outstanding balance and total interest costs.
- Check your mortgage contract for prepayment limits to avoid penalties.
5. Negotiate and Shop Around
- Do not accept your lender’s first renewal offer; negotiate for better rates or incentives.
- Compare offers from multiple lenders or use a mortgage broker, who can often access exclusive rates and incentives at no cost to you.
- If your lender won’t match a better offer, be prepared to switch for a better deal.
6. Consider Amortization Adjustments
- Temporarily extending your amortization can help reduce monthly payments if you’re facing financial strain, though it will increase interest costs over time.
7. Prepare for Higher Payments
- Most renewing borrowers in 2025 should expect higher payments than during their previous term.
- Nearly three-quarters of Canadians indicate they plan to adjust their budgets to manage these increases.
Special Considerations for 2025
- Market Trends: The Bank of Canada’s policy rate is forecast to remain around 2.75% through most of 2025, with possible declines toward 2026.
- Economic Uncertainty: External factors (global trade, inflation, monetary policy) could cause rate volatility; consider your own risk tolerance when choosing your renewal strategy.
- Government and Lender Programs: Some lenders and government programs offer incentives or flexible options for renewers—review what's available in your province.
Provincial Variations
- Prepayment privileges, penalties, and transfer costs can vary by province—always check specifics for your location.
- Quebec, for example, has unique lender disclosure rules and penalty structures compared to other provinces.
Recommendations and Next Steps
- Start early: Begin reviewing options up to six months before renewal.
- Compare rates: Use theratefinder to access competitive rates and a streamlined, multi-step application process.
- Model your payments: Use a Canadian mortgage calculator to plan for potential increases.
- Consult experts: Consider speaking with a mortgage broker or advisor to review your renewal strategy.
- Budget accordingly: Prepare for higher payments and adjust your household budget as needed.
- Review government incentives: Explore any renewal or homeownership assistance programs in your province.
Summary
Mortgage renewals in 2025 require proactive planning due to higher rates and economic uncertainty. Start early, compare rates using platforms like theratefinder, weigh your term and rate options, and negotiate to secure the best terms. Adjust your budget for potentially higher payments and consider professional advice for complex situations. For a personalized mortgage solution, start your application with theratefinder at theratefinder.ca/onboarding/email.