March 16, 2026
Across Canada, millions of homeowners are approaching mortgage renewal dates that look very different from the environment they originally financed in.
Five years ago, interest rates were sitting near historic lows. Today, many borrowers are facing the reality that their upcoming renewal rate may be significantly higher than the one they secured previously. (Just recently, I renewed a mortgage from 1.75% to 3.99%.)
For many households, the first reaction is simple:
“My mortgage payment is about to go up.”
But that isn’t always the only outcome.
In fact, depending on your mortgage structure, there may be ways to reduce your payment — even when rates are higher.
The key factor that determines whether this is possible often comes down to something many homeowners have forgotten:
How your original mortgage was structured.
Your Starting Point Matters More Than You Think
When your mortgage was first approved, it was set up with a specific amortization schedule.
For example:
If you purchased your home five years ago with less than 20% down, your mortgage would have been classified as a high-ratio insured mortgage.
That means your original amortization would have been 25 years, which was the standard maximum amortization allowed for insured mortgages in Canada at the time. (Today the maximum amortization allowable for insured mortgages is 30 years, subject to specific eligibility criteria.)
Fast forward five years.
You now have 20 years remaining on that amortization, meaning your payment calculations will now be based on this shorter remaining schedule.
And it is this reduced amortization that often creates the payment shock at renewal.
However, there is an important nuance many borrowers don’t realize.
Because your mortgage is insured, you generally qualify for the best interest rates available in the market. Lenders love insured mortgages because the default risk is backed by insurers such as CMHC, Sagen, or Canada Guaranty.
As long as you can provide the original insurer certificate number, you are typically eligible for the fully discounted rates available in the market today.
But despite those excellent rates, the amortization length still plays a massive role in determining the final payment.
At renewal time, lenders will maintain your current remaining amortization and calculate your new payment accordingly.
So for some, it can now feel like a double whammy:
- The interest rate increases
- The amortization tightens to 20 years
Example: How Renewal Can Increase Payments
Let’s look at a simplified example.
Suppose five years ago you borrowed $500,000 with a 25-year amortization at 1.75%.
Your monthly payment would have been approximately:
$2,055 per month
After five years, your balance might be roughly $417,000 remaining.
Now imagine renewing that balance at 3.99% with 20 years remaining.
Your new monthly payment becomes approximately:
$2,530 per month
That’s a payment increase of roughly:
+$475 per month
Even though the mortgage balance has gone down.
Why Amortization Often Matters More Than Rate
Most borrowers focus entirely on interest rates.
While rates certainly matter, the amortization schedule can have an even greater impact on the monthly payment.
For example:
Using the same $417,000 mortgage balance at 3.99%, here’s how payments change depending on amortization length.
20-year amortization:
$2,530/month
25-year amortization:
$2,195/month
That’s a reduction of roughly:
$335 per month
Simply by extending the amortization.
Resetting the Amortization: A Powerful Option
In some cases, homeowners may be able to transfer their mortgage to another lender and refinance instead of simply renewing.
This can allow the amortization to be reset to 30 years, which can significantly reduce the required payment.
Because a refinance resets the mortgage and removes the original insurance structure, the rate is typically slightly higher than insured mortgage rates. For this example, we’ll assume the 30-year amortization carries a rate 20 basis points higher.
Mortgage balance: $417,000
20-year amortization at 3.99%
Monthly payment: $2,530
25-year amortization at 3.99%
Monthly payment: $2,195
30-year amortization at 4.19%
Monthly payment: $2,040
Even with the slightly higher interest rate, extending the amortization to 30 years still reduces the payment by roughly:
$490 per month compared to the standard 20-year renewal payment.
This illustrates why amortization can often have a larger impact on the monthly payment than interest rate alone.
| Amortization | Interest Rate | Monthly Payment |
|---|---|---|
| 20 Years | 3.99% | $2,530 |
| 25 Years | 3.99% | $2,195 |
| 30 Years | 4.19% | $2,040 |
Why Banks Rarely Suggest This
These options exist in many situations.
But there’s a catch.
Extending your amortization usually requires:
- Re-adjudicating the mortgage application
- Re-registering the mortgage on title
- Reviewing income and financial documentation again
This takes time and manpower.
Most banks would prefer the path of least resistance:
Send a renewal offer → borrower signs → mortgage continues.
It’s quick. It’s efficient. And it’s profitable.
But it doesn’t always produce the best financial outcome for the borrower.
Yes, it can be confusing.
But the options are out there — you just need to know where to look and what to ask for.
Better yet, align yourself with a mortgage broker and have them do the work for you.
Another Option: Interest-Only Structures Using HELOCs
Some homeowners also explore home equity lines of credit (HELOCs) as part of their mortgage structure.
A HELOC allows a portion of the borrowing to be structured as interest-only payments.
This approach can significantly reduce required monthly payments because you are only paying the interest on that portion of the balance.
This strategy may make sense for homeowners who:
- Plan to sell the property in the near future
- Need short-term payment relief
- Are comfortable temporarily pausing principal repayment
It’s important to understand that this approach does not reduce the loan balance, so it should be viewed as a short-term strategy rather than a long-term solution.
Reverse Mortgages: An Option for Homeowners Over 65
For homeowners aged 65 and older, another potential strategy exists: the reverse mortgage.
If you have built up at least 55% equity in your home, a reverse mortgage allows you to access that equity without making monthly mortgage payments.
Instead, interest accrues over time and the balance is typically repaid when the property is eventually sold or when the borrower passes away.
While reverse mortgages are not suitable for everyone, they can be a powerful tool for homeowners who want to:
- Eliminate monthly mortgage payments
- Access tax-free cash flow
- Remain in their home during retirement
For many retirees, it can provide a way to improve monthly financial flexibility without having to sell their property.
The Bottom Line
Many homeowners approaching renewal assume their mortgage payment will inevitably increase.
Sometimes that is true.
But not always.
Your available options often depend on:
- How your original mortgage was structured
- Whether you are renewing or refinancing
- Your current equity position
- The amortization schedule available to you
In other words:
The strategy matters just as much as the rate.
Mortgage renewals are one of the few moments where borrowers have an opportunity to reassess their entire financing structure.
And sometimes, with the right analysis, the outcome can be far better than expected.
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