As we head into 2026, one of the biggest financial moments for many Canadian homeowners will be their mortgage renewal. The Bank of Canada estimates that about 60% of outstanding mortgages in Canada are expected to renew in 2025 or 2026, which means a huge number of households could be adjusting their budgets around the same time.

For some people, renewal will be a quick signature and done. For others, it could mean higher payments, tougher decisions about term length, or revisiting the whole household budget. The good news: the earlier you plan, the more options you usually have.

Why Are So Many Canadians Renewing in 2026?

Most Canadian mortgages are set up with a term, often 3 to 5 years, and very commonly 5 years. When that term ends, you either renew with your current lender or switch.

Canada did see unusually low mortgage rates from 2016 to 2021. However, most renewals happening in 2026 are tied to mortgages that were secured about 3 to 5 years earlier, roughly 2021 to 2025. Homeowners who took out mortgages before that period, for example, in 2016 to 2018, would typically have already renewed by now since their terms would have ended earlier, often around 2021 to 2023, depending on the term.

That is why the 2026 renewal wave is mainly about borrowers renewing mortgages from the more recent term cycle, not the older ones. This is also why you will hear so much about borrowers renewing after a period when rates were very low, because many renewals are connected to mortgages taken out in the years right before today’s rate environment shifted.

What to Expect at Renewal?

When you renew, you’re usually renewing at today’s market rates, not the rate you had 3–5 years ago. If your old rate was lower than what’s available now (which is true for many borrowers), your payment can rise—even if your mortgage balance has gone down.

The Bank of Canada has flagged that most mortgage holders renewing in 2025–2026 are likely to see payments increase, although the size of that increase depends on things like your original rate, amortization, and whether you choose fixed or variable at renewal.

A helpful context point: the Bank of Canada has also noted that many borrowers who originated during the pandemic had to qualify under the stress test, and more than 90% of five-year fixed-rate holders are expected to face payment increases smaller than what they were stress-tested for (based on market expectations at the time of that report). That doesn’t mean renewals will feel easy, but it suggests many households may have had some built-in buffer when they first qualified. 

Important Update for Mortgage Renewals

Some mortgages with low rates may have bona fide sale clauses included. What this means is, the client cannot refinance until their mortgage term is up or they sell the home. If you’re approaching your mortgage renewal, make sure to review your mortgage terms carefully, as this could limit your ability to switch lenders or refinance without selling your home. Always consult with a mortgage broker to fully understand your options and avoid surprises.

Stress Test Rules: What Happens if You Switch Lenders?

This is another area where people get mixed messages, because the rules depend on what kind of switch you’re doing.

• If you renew with your current lender, you typically don’t re-qualify the same way you would for a brand-new mortgage.
• If you switch lenders at renewal, the situation has changed in recent years.

OSFI (Canada’s federal banking regulator) has stated that it does not expect lenders to apply the minimum qualifying rate (stress test) for uninsured “straight switches” at renewal, as long as there’s no increase to the amortization or the loan amount.

But if you’re doing more than a straight switch like refinancing, increasing your mortgage amount, extending amortization, or making other material changes, you may still need to qualify under standard underwriting rules.

Why Planning Ahead is Crucial

It’s getting yourself into the strongest position so you can choose the renewal path that fits your life.

• Start early (ideally 4–6 months out)

Give yourself time to compare options, negotiate, and avoid last-minute pressure.

• Review your mortgage like it’s a contract (because it is)

Check:

• current rate and payment
• remaining amortization
• renewal date
• prepayment privileges
• penalties (if you’re thinking of making changes early)

• Build a “payment buffer” now

Even a small monthly increase into savings can soften the impact later, especially if you’re expecting a higher renewal rate.

• Decide what you want your next term to do

A shorter term can offer flexibility if you think rates may move, while a longer term can offer stability if predictable payments matter most. There isn’t one “best” answer—there’s what fits your risk comfort and cash flow.

• If switching is on the table, prep like you’re applying (even if you may be exempt)

Even when a straight switch is easier than it used to be, strong fundamentals still help:

• keep debts manageable
• avoid big credit changes right before renewal
• keep documents organized (income, property tax, insurance, etc.)

Key Tips for a Smoother Mortgage Renewal in 2026

• Don’t wait for the renewal letter to start thinking

Treat your lender’s renewal notice as confirmation, not your cue to begin. Start 4 to 6 months before your renewal date, and even earlier if your budget is tight or you are considering switching lenders.

Quick move: Put a reminder in your calendar for 180 days before renewal and 120 days before renewal.

• Compare the full offer, not just the rate

A slightly lower rate can cost more if the mortgage is restrictive.

When you compare offers, look at:

• Prepayment privileges:
  • How much extra can you pay each year (e.g., 10%–20%)?
  • Can you increase your payment? Do lump sums apply anytime?
• Penalties and restrictions:
  • Fixed mortgages often have a different penalty structure than variable.
  • Some “discount” mortgages come with stricter rules (limited prepayments, harder to break, etc.).
• Portability:
  If you might move in the next few years, ask: Can I port this mortgage to a new home? What conditions apply?
• Blend-and-extend options:
  If rates change, can you blend your rate and extend the term instead of fully breaking?
• Features that fit your lifestyle:
  Payment frequency options, the ability to switch from variable to fixed later, and how flexible the lender is if life changes.

Rule of thumb: The “best” mortgage is the one that’s cheapest over time and easiest to live with.

• Run the “what if my payment goes up?” scenario now

This is the best way to avoid payment shock.

• Do a simple stress test on yourself:
  • What if your payment rises by $200 / $400 / $600 per month?
  • Would you still feel comfortable? What would you cut first?
• Start adjusting gradually:
  • Even adding $50–$150/month to savings now can make the renewal feel way less scary later.
• If your budget is already stretched, you may want to explore:
  • a different term length
  • payment frequency changes
  • strategies to reduce interest costs (where it makes sense)

Quick move: Ask for a side-by-side estimate of your payment at three rate scenarios (conservative, expected, worst-case) so you can plan without guessing.

• Ask about options that match your reality

Ask about options that match your reality (fixed vs variable, term length, payment frequency).

Quick move: Before choosing, ask: “If I sell/move in 2–3 years, what would it cost me to break this mortgage?” That one question prevents a lot of regret later.

With such a large share of mortgages renewing in 2025–2026, the biggest advantage you can give yourself is time. The earlier you review your numbers and options, the more likely you are to avoid surprises and lock in a renewal strategy that fits your budget and plans.

If you’re approaching your mortgage renewal in 2026, now is the time to start preparing. I, Sandra Brown, can help you by reviewing your renewal options, comparing scenarios, and building a plan that reduces payment shock, so you feel in control before the renewal date hits.