Mortgage Renewal in 2026: What Canadian Homeowners Need to Know Now

By Alex McFadyen, Mortgage Broker at Flow Mortgage Co. | Published December 16, 2025 | Updated April 8, 2026

How Big Is the 2026 Mortgage Renewal Wave?

980,000 fixed-rate mortgages will renew in 2026, according to CMHC's mortgage renewal analysis. That comes on top of 1.2 million that already renewed in 2025. The majority of these borrowers locked in 5-year fixed terms between 2020 and 2022 at rates between 1.5% and 2.5%.

Those rates no longer exist. The best available 5-year fixed rate today is about 3.84% for insured mortgages, and 4.09% for conventional (20%+ equity). The Big Banks are posting around 4.29%. If your current rate is 2%, you are looking at roughly double your interest cost on the remaining balance.

CMHC estimates the average payment increase for 5-year fixed borrowers renewing in 2026 at roughly 20%. For a homeowner carrying a $470,000 balance at 2%, renewing at 4% on a 22-year remaining amortization, that works out to about $480 more per month. Not catastrophic for most households, but a real hit when combined with everything else that has gotten more expensive.

Related: The 2026 Mortgage Payment Spike Explained

Why Should You Ignore Your Bank's First Renewal Letter?

Your bank will send a renewal offer 4-6 months before your term ends. That letter will include a rate, a suggested term, and a signature line. It is designed to be easy. Sign, return, done.

Do not sign it.

That first offer is almost always higher than what the same bank would give you if you pushed back, and it is almost certainly higher than what a competitor or monoline lender would offer. Banks count on inertia. They know most homeowners will not shop around. The ones who do save thousands.

Here is what to evaluate in any renewal offer:

• The rate. Compare it to published rates on Ratehub or through a broker. Even 0.15% matters. On a $400,000 balance over 5 years, 0.15% is roughly $2,800.
• The term. A 5-year fixed is the default, but a 3-year or even a variable rate might fit your situation better.
• Prepayment privileges. Can you make lump sum payments of 15-20% annually? Can you increase your regular payment by 15-20%? These features save tens of thousands over the life of your mortgage.
• Portability. If you plan to move, a portable mortgage lets you transfer your rate and terms to a new property, avoiding penalties.
• Penalty structure. Interest Rate Differential (IRD) penalties can be brutal. Three-month interest penalties are more forgiving. Know which your lender uses.

Related: BMO Credit Line Cuts: What Homeowners Need to Know

Does the Stress Test Apply to Mortgage Renewals?

This is the question I get more than any other at renewal time. The answer depends on what you are doing.

Renewing with your current lender (same amount, no major changes): No stress test. You sign the new rate and term. Your lender does not re-qualify you. This is the path of least resistance and the main reason some homeowners stay even when a competitor offers a better rate.

Switching to a different lender: Full stress test. You must qualify at the higher of 5.25% or your contract rate plus 2%. At a 4% contract rate, that means qualifying at 6%. For a homeowner with a $470,000 balance and 22 years remaining, you would need roughly $100,000-$105,000 in household income to qualify.

Refinancing (increasing your mortgage amount): Full stress test, regardless of lender. Plus you pay legal and appraisal fees.

If your income has not changed much since you first got your mortgage, the stress test at today's rates should not be an issue. But if you have taken on new debt (car payments, credit cards, a HELOC) or if your income dropped, switching lenders could be harder than expected.

Related: HELOC Debt in Canada: Understanding the Surge and Your Options

What Should You Do 9-12 Months Before Renewal?

The worst thing you can do is wait for your bank's letter. The second worst thing is to sign that letter the day you get it. Here is the timeline that saves money.

9-12 Months Out: Assess Your Financial Position

Pull your credit score. Check for errors. Pay down any high-interest debt you can. Every dollar of credit card or car loan debt you eliminate improves your debt service ratios, which matters if you decide to switch lenders.

6-9 Months Out: Talk to a Broker

A mortgage broker has access to 30+ lenders. We can show you what rates are available across the market, not just from your current bank. We help you decide: fixed or variable? 3-year or 5-year? Stick or switch? And our fee is paid by the lender in standard transactions, so this costs you nothing.

4-6 Months Out: Lock Your Rate

Most lenders let you lock a rate 120 days before renewal. If you find a great rate at 5 months out, lock it. If rates drop before your renewal date, many lenders will give you the lower rate. If rates rise, you are protected. There is no downside to locking early.

1-2 Months Out: Finalize and Sign

Whether you stay or switch, have your new agreement signed well before your maturity date. If your term expires without a signed renewal, your mortgage reverts to a high open variable rate, typically prime plus 1% or more. That is an expensive limbo you want to avoid.

Should You Pick Fixed or Variable at Renewal in 2026?

With the Bank of Canada at 2.25% and 5-year fixed rates at 3.84-4.09%, the gap between fixed and variable is narrower than it was during the rate-hike cycle. Here is how to think about it.

Fixed rate gives you payment certainty for the full term. You know exactly what you owe every month. If rates climb, you are protected. If rates drop, you are stuck (unless you break the mortgage, which triggers a penalty).

Variable rate tracks prime. Right now, prime is 4.45%. Variable rates from brokers typically price at prime minus a discount, landing around 4.0-4.2%. If the Bank of Canada cuts further, your payments drop. If they hold, you pay about the same as fixed. If they hike unexpectedly, your payments rise.

Historically, variable rates have saved borrowers money over full terms about 80% of the time. But "historically" includes periods with very different economic conditions. In 2026, with rates already low relative to recent highs and the BoC signaling a hold, the fixed-variable choice is closer to a coin flip than usual.

My advice: if payment predictability matters to you and you sleep better knowing exactly what you owe, go fixed. If you have cash flow flexibility and can handle potential payment increases, variable may save you money. Talk to a broker about your specific numbers.

Related: What a BoC Rate Decision Means for Variable Payments

Related: Canadian Mortgage Rates: Are Rate Cut Hopes Fading?

Can You Extend Your Amortization to Reduce Payment Shock?

Yes, and this is one of the most underused tools at renewal.

If you originally took a 25-year mortgage five years ago, you have about 20 years remaining. At renewal with your current lender, many institutions will let you reset back to 25 years. Some will even go to 30 years on uninsured mortgages.

On a $400,000 balance at 4%:

Extending from 20 to 25 years saves $315/month. Extending to 30 years saves $518/month. The trade-off is clear: you pay significantly more interest over time. But if the alternative is missing payments or draining your emergency fund, extending your amortization buys breathing room.

The key: once your finances stabilize, use prepayment privileges to make extra payments and shorten the amortization back down. Do not treat the extended amortization as permanent.

Related: 50-Year Mortgages: Would They Fix Canadian Homeownership?

What Does a Broker Actually Do at Renewal That Your Bank Does Not?

Your bank has one set of products. A broker has 30+. Here is the concrete difference.

Your bank sends you 4.29%. A broker sends you 3.84% from a monoline lender, 3.94% from a credit union, and 4.10% from a different big bank. Even if you in the end stay with your current bank, you can take those competing offers back to them and negotiate down. Most banks will match or come close when faced with a written competing offer.

Beyond rate: a broker evaluates your prepayment privileges, penalty structure, portability options, and whether a HELOC component makes sense. We look at your full financial picture, not just the renewal transaction.

And we do not charge you for this. On a standard renewal or switch, the lender pays the broker's fee. You get access to the entire market at no cost.

Related: House Rich, Cash Poor: What You Can Do About It

What Features Should You Negotiate Beyond the Rate?

The rate gets all the attention, but these features can save you just as much money over a five-year term.

Prepayment privileges: The best products let you pay down 20% of the original principal per year in lump sums, plus increase your regular payment by 20%. On a $400,000 mortgage, that is $80,000/year in extra payments without penalty. Even if you never use the full amount, having that flexibility matters.

Portability: If you sell and buy within a certain window (usually 90-120 days), you can transfer your rate and terms to the new property. This avoids a penalty on the old mortgage and lets you keep a good rate.

Penalty type: Standard chartered bank penalty calculations use the Interest Rate Differential (IRD), which can produce penalties of $15,000-$30,000 on a $400,000 mortgage. Monoline lenders typically use three-month interest, which caps the penalty at roughly $4,000. If there is any chance you will break your mortgage before the term ends, the penalty structure is worth more than a 0.05% rate difference.

Blend-and-extend: Some lenders let you blend your existing rate with a new rate and extend your term. This avoids a penalty entirely. The blended rate is usually higher than market, but the penalty savings can offset the rate premium.

Related: The Home Equity Tax: What Canadian Homeowners Should Know

Bottom Line

980,000 Canadian mortgages are renewing in 2026. If yours is one of them, do not sign the first offer your bank sends you. Start 9-12 months before maturity. Talk to a broker. Compare fixed vs variable. Evaluate prepayment and penalty terms. Lock a rate when you find one that works.

The payment increase from pandemic rates to today's rates is real but manageable with the right strategy. Extending your amortization buys cash flow. Switching lenders can save thousands. And a broker does all of this for free.

Do not let inertia cost you money.

FAQ

Do I have to pass the stress test if I just renew with my current lender?

Generally no. Renewing with your existing lender for the same or lower amount, without major term changes, is typically exempt from the stress test. Switching lenders or refinancing for a higher amount triggers full B-20 re-qualification at the higher of 5.25% or your contract rate plus 2%.

How far in advance should I start planning my mortgage renewal?

9 to 12 months before your maturity date. Most lenders let you lock a rate 120 days out. Starting early gives you time to improve your credit, reduce debt, and compare offers from multiple lenders.

How many mortgages are renewing in 2026?

CMHC estimates 980,000 fixed-rate mortgages will renew in 2026, following 1.2 million in 2025. Most of these borrowers locked pandemic-era rates between 1.5% and 2.5%.

Is it always better to switch lenders at renewal?

Not always, but you should always shop around. A broker can show you what 30+ lenders offer. Even if you stay with your bank, having competing offers gives you negotiating leverage. Most banks will match or come close to a written competitor rate.

What happens if I do not sign a renewal before my term expires?

Your mortgage converts to a high open variable rate, typically prime plus 1% or more. This is almost always more expensive than any renewal offer. Always have a signed agreement in place before maturity.

Can I extend my amortization at renewal to lower my payments?

Yes, if you stay with your current lender. Many allow a reset to 25 or even 30 years, which can reduce monthly payments by $300-$500. You pay more total interest, but it protects cash flow. Use prepayment privileges to accelerate paydown once finances stabilize.

Should I choose fixed or variable at renewal in 2026?

With the BoC at 2.25% and fixed rates at 3.84-4.09%, the gap is narrow. Fixed gives certainty. Variable gives potential savings if the BoC cuts further. Choose based on your risk tolerance and cash flow flexibility. Talk to a broker about your specific situation.