If you locked in a five-year fixed mortgage rate between 2020 and 2022, there's a very good chance your renewal is coming up this year. And if you haven't started preparing yet, now is the time — because the rate you're about to leave behind and the rate you're about to step into could look very different.
You're not alone in this. Roughly 2.2 million Canadian households are facing mortgage renewals in 2025 and 2026, many of them coming off pandemic-era rates that hovered just under 2% to around 2.5%. Today's rates? Five-year fixed rates are sitting just over 4%. That gap can translate into real money out of your pocket every month.
What “Renewal Shock” Actually Looks Like
Let's make this real. Say you have a $500,000 mortgage balance and you locked in at around 2% five years ago. Your monthly payment has been around $2,120. At renewal, if your new rate is just over 4%, that payment jumps to roughly $2,640 — an increase of over $500 per month, or about $6,200 per year. That's a family vacation. That's a chunk of your kids' education savings. It adds up fast.
For borrowers who stretched to buy at the top of the market with minimal down payments, the shock can be even more significant. This is why starting early and exploring your options is so important.
The Biggest Mistake: Signing Your Bank's Renewal Letter
Here's something most homeowners don't realize: when your lender sends you a renewal offer, it's almost never their best rate. Banks reserve their most competitive rates for new clients, not existing ones. They're counting on the fact that most people will simply sign and return the letter out of convenience.
Don't do this. The difference between your bank's renewal offer and the best rate available on the market can easily be 0.15%–0.40%. On a $500,000 mortgage over a five-year term, that could cost you $3,500 to $10,000 in extra interest. A quick conversation with a mortgage broker could save you thousands.
Six Smart Strategies for Your 2026 Renewal
1. Start shopping 120 days before your renewal date. Most lenders will offer rate holds up to 120 days before maturity. This means you can lock in today's rate as a safety net — if rates drop before your renewal, you get the lower rate. If they rise, you're protected. There's no downside to starting early.
2. Work with a mortgage broker, not just your bank. A broker has access to dozens of lenders, including credit unions, monoline lenders, and alternative options that your bank won't tell you about. Our mortgage renewal service costs you nothing — we're paid by the lender.
3. Consider switching lenders. Switching at renewal is free in most cases (no penalties apply at the end of your term). If another lender offers a better rate or more flexible terms, there's no reason to stay loyal to a bank that isn't offering you their best.
4. Think carefully about fixed vs. variable. With the Bank of Canada's policy rate at 2.25% and potential for further movement, the fixed-vs-variable decision matters more than ever. Fixed rates give you certainty. Variable rates can save you money if rates trend down. Your broker can model both scenarios based on your specific situation and risk tolerance.
5. Explore extending your amortization. If payment shock is a real concern, extending your amortization period (for example, from 20 remaining years to 25 or 30) can lower your monthly payment significantly. You'll pay more interest over the long run, but it gives you breathing room in the short term — and you can always increase payments later when you're more comfortable.
6. Use your renewal as a financial reset. Renewal time is actually a great opportunity to consolidate high-interest debt, set up accelerated payments, or restructure your mortgage to better fit your current life. Think of it as a financial check-up, not just a rate negotiation.
Fixed or Variable in 2026: What Makes Sense?
This is the question we get asked most. And the honest answer is: it depends on you. If you value predictability and sleep well knowing your payment won't change, a fixed rate is your friend. Current five-year fixed rates are sitting just over 4%, with some lenders offering even better for well-qualified borrowers.
If you're comfortable with some fluctuation and believe the Bank of Canada will continue its easing path, a variable rate mortgage could save you money. Variable rates are currently around prime minus a discount, putting them in a competitive range. But variables come with risk — if inflation picks up or global trade tensions escalate, rates could move higher.
Our advice: Don't guess. Let us run the numbers for both options based on your actual mortgage balance, remaining amortization, and financial goals. The right choice is personal, and we're here to help you make it with confidence.
Your Renewal Timeline Checklist
6 months before renewal: Review your current mortgage details — balance, rate, term, remaining amortization. Think about your financial goals for the next 3–5 years.
4 months before renewal: Contact Newcastle Financial to start shopping rates. We'll secure a rate hold and explore all your options.
2 months before renewal: Finalize your decision. Choose your lender, rate type, and term. If switching lenders, your broker and lawyer will handle the transfer.
Renewal date: Your new terms kick in seamlessly. No disruption, no stress.