By Bonnie Thorlakson, Mortgage Specialist — Kelowna, BC

What Is Mortgage Renewal?

Short answer: Renewal is when your current mortgage term ends and you renegotiate the rate and conditions for the next term — usually without requalifying, though you always have the option to switch lenders.

When you took out your mortgage, you agreed to a specific interest rate for a set term — typically 1 to 5 years. When that term ends, the full remaining balance becomes due. Since almost nobody pays off a mortgage in one term, you renew: you renegotiate the rate and conditions for the next term and keep making payments.

What makes renewal a significant financial moment is that the rate you renew at is determined by market conditions at renewal time — not when you first signed. If rates have risen since you originally took out your mortgage, your payment will be higher. Sometimes significantly higher.

Why Mortgage Renewal Can Come as a Shock

Between 2020 and 2022, many Canadians locked in mortgage rates between 1.5% and 2.5%. Those terms are now expiring. Rates available at renewal today are substantially higher — in many cases, homeowners are renewing into rates two to three times what they originally paid.

The result is what’s commonly called mortgage payment shock: a sudden, sharp increase in monthly mortgage payments that wasn’t anticipated or budgeted for.

Example: A $400,000 mortgage at 2.0% over 25 years carries a monthly payment of roughly $1,695. At renewal into a 5.5% rate, that same remaining balance could cost $2,300–$2,500 per month depending on the remaining amortization — an increase of $600–$800 per month.

When to Start Thinking About Renewal

Most lenders will contact you 30 to 60 days before your renewal date with an offer. That offer is almost never their best rate — it’s designed for convenience, not savings. The earlier you start, the more options you have.

  1. 120 days (4 months) before renewal: Start reviewing your options. Many lenders allow you to lock in a rate 120 days before your renewal date at no cost. This protects you if rates rise, while still allowing you to benefit if rates fall before renewal.
  2. 90 days before renewal: A good time to engage a mortgage specialist to compare lender offers and assess whether switching makes financial sense.
  3. 60 days before renewal: Your lender’s offer typically arrives. Treat it as a starting point, not a final answer.
  4. 30 days before renewal: Decision time. Staying with your lender usually means no legal fees or appraisal costs. Switching may save more on rate but carries some administrative costs.

Should You Stay With Your Current Lender?

Staying is easier. Switching is sometimes worth it. The right answer depends on the rate gap and the switching costs.

When you renew with your existing lender, the process is straightforward: sign the renewal offer and continue. There’s no requalification, no legal fees, and no appraisal. Your lender knows this and may offer a slightly better rate than their posted rate — but typically not their most competitive one.

Switching lenders at renewal can access rates your current lender won’t match. The costs of switching — legal fees, potential appraisal — are sometimes covered by the new lender as an incentive. If the rate difference is 0.25% or more on a large balance, switching can be worth it over a 5-year term.

Fixed vs. Variable Rate at Renewal

Renewal is also an opportunity to reconsider your rate type. If you’re coming off a fixed rate and rates appear to be declining, a variable rate might save you money over the next term. If rates are uncertain or rising, the stability of a fixed rate provides predictable payments and peace of mind.

There’s no universally correct answer. The right choice depends on your financial situation, how much payment variability you can absorb, and where rates are heading — something a specialist who follows the market closely can help you think through.

What If You Can’t Afford the Renewed Payment?

This is a real situation for many Canadians right now, and there are options — but none of them are free.

  • Extend your amortization: Resetting to a longer amortization period reduces the monthly payment but increases total interest paid over the life of the loan.
  • Refinance: If you have built-up equity, refinancing can restructure your debt at a lower overall payment. Be aware of prepayment penalties if breaking a term early.
  • Secondary suite refinancing: New 2025 federal rules allow refinancing to add a secondary suite, which can generate rental income to offset a higher payment. See the New Mortgage Rules 2025 page for details.
  • Talk to your lender proactively: Lenders generally prefer to work with borrowers before a crisis rather than after missed payments. Many have payment deferral or restructuring options that aren’t widely advertised.

If your renewal is coming up and you’re unsure what to expect, contact Bonnie — she can review your specific situation and help you prepare before the offer lands.

How a Mortgage Specialist Helps at Renewal

Most people simply sign their renewal letter and move on. A mortgage specialist looks at the full picture: current market rates, your remaining amortization, your financial goals, and whether your existing lender is actually offering you a competitive rate.

Renewal is one of the few moments in your mortgage where you have full leverage — you can switch lenders, renegotiate terms, and restructure your amortization without penalty. Taking 30 minutes with a specialist before signing a renewal can save thousands over the next term.

My name is Bonnie Thorlakson and I help Kelowna homeowners navigate renewal — whether that’s comparing lender offers, timing a rate lock, or restructuring a mortgage that no longer fits. Get in touch and I’ll be straight with you about your options.