Mortgage renewal is a normal part of home ownership, but the 2025/2026 cycle will be anything but routine. More than 1.2 million mortgages are set to renew in Canada during 2025. Many of those loans were taken out in 2020–2021 when fixed and variable rates were below 2 percent. With rates now sitting in the 3–4 percent range, Ontario homeowners can expect higher monthly payments when their terms mature. The good news is that renewal time is an opportunity to renegotiate your mortgage, access equity and potentially reduce your overall borrowing cost. This guide explains what’s happening in the market, outlines strategies to cushion payment shocks and offers tips specific to the Ontario housing market.

Why 2025/2026 Renewals Are Different

Large number of renewals: More than 60 % of outstanding mortgages in Canada will come up for renewal in 2025 or 2026. With so much business up for grabs, lenders may offer very competitive deals.

Higher rates than your last term: Five‑year fixed rates averaged below 2 % in 2020, while variable rates hovered near 1.25 %. Current five‑year fixed mortgage rates in mid‑2025 are in the high‑3 to low‑4 percent range, and variable rates sit around 5 %. Borrowers renewing now could see payments jump by hundreds of dollars per month.

Rate volatility: The Bank of Canada cut its overnight rate multiple times between 2024 and early 2025, bringing it down to 2.75 %. Economists expect further modest declines, but bond yields remain volatile due to inflation and economic uncertainty.

Relief for switchers: New federal rules exempt some “straight‑switch” renewal clients from the mortgage stress test, making it easier to move between lenders.

Know the Ontario Housing Market
Understanding your local market can help you decide whether to refinance, renew early or keep your current mortgage. In Ontario (data for July 2025), the average sold price across all property types is about $1.26 million, down 2.8 % year‑over‑year. Detached homes average around $1.73 million (‑4.7 % year‑over‑year), semi‑detached homes about $1.09 million (‑7.6 % year‑over‑year), townhouses roughly $1.09 million (‑6.2 % year‑over‑year) and condo townhouses $842,000 (‑14.1 % year‑over‑year). A decline in prices may mean you have less equity than expected, but the drop is modest enough that most long‑term owners still have substantial equity.

1. Start Early – Up to 180 Days Before Maturity
Don’t wait for your lender’s renewal letter. Major lenders let you lock in a rate as much as 120 days before maturity, and some, such as RBC, offer a 180‑day early renewal option that allows you to lock a rate without penalty. Starting the process early provides flexibility to:

Hold a rate while you shop. Many lenders will “hold” a rate for up to four months. If rates drop before closing, you can renegotiate; if they rise, you’re protected.

Compare multiple offers. Even a 0.20 percentage‑point difference on a $450,000 mortgage saves about $900 per year. Collect quotes from banks, credit unions and independent mortgage brokers.

Avoid penalties. Renewing during the early‑renewal window means you don’t pay a prepayment penalty.

2. Shop Around and Negotiate
Your existing lender will often send an auto‑renewal offer, but it may not be the best rate. Borrowers could save thousands by switching lenders. Here’s how to shop effectively:

Use a mortgage broker. Brokers have access to multiple lenders and often receive volume discounts. Their services are typically free to the borrower.

Leverage rate competition. Banks will be eager to retain customers during the renewal wave; use quotes from other lenders as leverage.

Understand stress‑test exemptions. New rules make it easier to switch lenders without re‑qualifying.

Check penalty clauses. Some lenders impose hefty penalties on early exits. Switching at renewal avoids these costs.

3. Decide Between Fixed and Variable – Align With Your Goals

Renewal time is an opportunity to reassess your risk tolerance and plans. Ask yourself:

Do you need payment certainty? Fixed rates provide stability, which can be important if you’re carrying high debt or expect your income to change. They may be appropriate if you plan to stay in your home for several years.

Are you comfortable with some rate risk? Variable‑rate mortgages can offer lower initial rates and benefit if the Bank of Canada cuts further, but payments will rise if rates increase.

How long do you plan to stay? Shorter terms (two‑ or three‑year) have become popular as borrowers seek flexibility. A three‑year fixed may beat a five‑year if rates fall by mid‑2026.

Do you need access to equity? Refinancing your mortgage allows you to borrow against your home for renovations, debt consolidation or investments.

4. Extend Amortization or Make Prepayments
If higher payments will strain your budget, consider adjusting your amortization. Extending from 20 years to 25 years can lower monthly payments but increases total interest. You may also:

Make lump‑sum payments or increase regular payments ahead of renewal to reduce your principal. This reduces overall interest and gives you more flexibility, though it may not be ideal if you need to conserve cash.

Utilize prepayment privileges. Many lenders allow up to 15–20 % of your original principal to be prepaid each year.

5. Consider Refinancing Rather Than Simply Renewing

Renewal isn’t your only option. Refinancing means negotiating a new mortgage amount, often at a different lender, before your term expires. It can be beneficial when:

You need to consolidate high‑interest debt. Rolling credit card or personal loan balances into your mortgage can reduce interest costs.

You want cash for renovations or investments. Accessing home equity can finance upgrades or other purchases.

You plan to sell soon. An open mortgage or shorter term may be better if you expect to move within a year.

However, refinancing before maturity may involve penalties; consult a mortgage professional to model your options.

6. Refresh Your Budget and Credit
Renewal time is also an opportunity to tighten your finances and improve your credit:

Assess your debt service ability. Evaluate how a higher rate will affect your monthly payments and overall debt load. Reduce discretionary spending and look for ways to increase income.

Consolidate or pay down high‑interest debt. Consolidating through your mortgage or paying off expensive balances frees cash flow.
Monitor your credit score. A strong credit score can unlock lender‑paid appraisal fees or rate discounts.

Review insurance and contingency plans. Ensure your home and life insurance coverage is adequate and build emergency savings.

7. Stay Informed About Market Trends and Government Policies
Mortgage rates are influenced by economic indicators and policy decisions. Keep an eye on:

Bank of Canada policy announcements and inflation data, which affect variable rates and bond yields.

Bond market expectations. Traders are pricing in further modest rate cuts; expectations may shift with economic news.

Government programs. Watch for federal or provincial measures aimed at easing affordability, such as first‑time buyer incentives or stress‑test adjustments.

Staying informed helps you decide whether to lock into a fixed rate or wait for potential rate drops.

8. Work With a Local Ontario Mortgage Expert
National trends are useful, but every homeowner’s situation is unique. A local mortgage broker understands Ontario’s housing market, municipal taxes and regional lenders. They can help you:

Compare local lender options, including smaller credit unions that may offer lower rates or more flexible terms.

Assess your home’s value. Ontario’s benchmark home price is about $1.2 million. A broker can order an appraisal to ensure you still have enough equity for refinancing.

Plan for property taxes and insurance. Ontario’s property taxes and insurance costs can influence your monthly budget.
Takeaway and Call to Action

The 2025/2026 renewal wave presents challenges—higher rates and potential payment shock—but also opportunities. By starting early, shopping around, considering fixed versus variable options, and working with a knowledgeable Ontario mortgage broker, you can secure a competitive rate and structure your mortgage to fit your goals. Don’t sign the first renewal offer without exploring other options. Prepare your budget, refresh your credit, and stay informed about market trends.

Ready to renew or refinance your mortgage? Contact our Ontario mortgage team today for a free consultation. We’ll review your current mortgage, explain your renewal and refinancing options, and help you secure the best available rate. The earlier you start, the more control you’ll have over your financial future.

Follow us on social media :
Subscribe for Mortgage renewal news on Facebook
Subscribe for Mortgage renewal news on Linkedin