Should you re-evaluate your mortgage at renewal time?
For many homeowners, mortgage renewal time can feel little more than an exercise in paperwork.
However, mortgage renewals are so much more than simply signing on the dotted line. In fact, they represent one of the best opportunities you’ll have to take a step back and ensure your mortgage still aligns with your budget, overall financial goals, and where you are in life today.
COVID-era mortgages are especially important to re-evaluate.
We’re talking about mortgages that were secured during the exceptionally low-interest rate environment of 2020 and 2021 (when fixed mortgage rates below 2% were not uncommon). While those historically-low borrowing costs benefited homeowners at the time, they were also the exception—not the rule.
Today, mortgage rates have largely stabilized around levels that are much closer to long-term historical averages.
Although economists expect the Bank of Canada to continue monitoring economic conditions carefully, most major financial institutions forecast that significant rate cuts are unlikely in the near future. For homeowners preparing for an upcoming renewal, that means planning for today’s borrowing environment—versus ruminating over the ‘unicorn rates’ of yesteryear.
With that in mind, here are 9 solid reasons to re-evaluate your mortgage before renewal time:
1: Don’t assume renewing with your current lender is your only option
Your lender will typically send a renewal package several weeks (or months) before your maturity date. While instantly accepting that offer may seem like the easiest option, it isn’t necessarily the best one.
Instead, view your mortgage renewal as a timely opportunity to:
- Compare rates from multiple lenders
- Negotiate a better/more competitive rate
- Review different mortgage products
- Evaluate repayment flexibility and features
- Determine whether switching lenders could better suit your needs
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2: Prepare your budget for today’s interest rates—not yesterday’s
As we mentioned above, just because rates are higher than they were at the start of the decade, doesn’t mean they are unusually so. Rather, it reflects a return to borrowing costs that are more consistent with what Canadians experienced for much of the past two decades.
The ultra-low mortgage rates available in the early part of the 2020s were largely the result of extraordinary economic conditions and emergency monetary policy measures. Because those conditions have passed, it’s important to build your household budget around today’s borrowing costs, rather than hoping rates will return to those unconventional lows.
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3: Stress-test your monthly budget before renewal
One of the smartest things you can do before renewing your mortgage is ask yourself a simple question:
“If my mortgage payment increases, will my budget still comfortably work?”
Even if the answer is yes, renewal provides an opportunity to revisit your overall household finances.
Consider how your monthly expenses may have changed over the past 5 years, including:
- Utilities
- Grocery costs
- Property taxes
- Home insurance
- Childcare expenses
- Vehicle payments
- Transportation expenses
- Savings contributions
Looking at your complete financial picture, not just your mortgage payment, can help prevent unnecessary financial stress after renewal.
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4: Review your mortgage term (not just your interest rate)
Many homeowners focus exclusively on finding the lowest rate possible—and while interest rate certainly matters, it’s only one part of the equation.
Renewal is also a good time to consider whether your mortgage term still fits your circumstances.
Questions worth asking include:
- Is a fixed-rate mortgage still the right choice?
- Would a shorter (or longer) term better suit your plans?
- Would a variable-rate mortgage align with your comfort level for changing payments?
- Are generous prepayment privileges important to you?
- Do you anticipate moving within the next few years?
5: Review your overall debt (not just your mortgage)
Mortgage renewal time is also an excellent opportunity to review your broader financial picture.
Over the past several years, you may have accumulated additional debt, including:
- Credit cards
- Personal loans
- Vehicle financing
- Lines of credit
If those balances are carrying relatively high interest rates, renewal may present an opportunity to explore refinancing. Depending on your available home equity and lender qualification requirements, refinancing could allow you to consolidate multiple debts into one manageable monthly payment—potentially at a lower overall interest rate than unsecured borrowing.
While refinancing isn’t the right solution for everyone, it’s worth discussing with a mortgage professional before making any decisions.
How refinancing your mortgage could help you save money, increase cash flow, and consolidate debt
6: Don’t overlook variable lines of credit
If you also have a home equity line of credit (HELOC) or another variable-rate borrowing product, renewal time is a good reminder to review those balances as well.
That’s because, unlike fixed-rate mortgages, borrowing costs on variable-rate products generally move alongside changes to the lender’s prime rate. Although interest rates have stabilized, economists are not expecting borrowing costs to fall dramatically in the near future.
That means carrying large revolving balances could continue to be expensive.
If possible, consider creating a repayment plan that steadily reduces outstanding balances, rather than relying on future rate decreases to lower your borrowing costs.
7: Think about how your life has changed over the past five years
A lot can happen between mortgage renewals—perhaps you’ve:
- Moved your way up the pay grid
- Changed schools or school boards
- Started a family/having kids
- Purchased another vehicle
- Paid off student loans
- Started thinking about retirement
- Become an empty nester
Renewal time provides the perfect opportunity to make sure the financing option you’ve selected for your home, continues to support your life goals and priorities in the here and now.
8: Think about how your life has changed over the past five years
Speaking of your financial priorities, those may look very different today than they did five years ago.
Depending where you are in life (and your education career), you may be looking to:
- Increase monthly cash flow
- Pay off your mortgage sooner
- Reduce overall monthly payments
- Save more for retirement
- Renovate your home
- Help children with future education costs
- Invest more consistently
Your mortgage can often be structured to better support those objectives and more.
Rather than automatically renewing the same mortgage you already have, take time to consider whether your mortgage is still working for you—or whether it could be working harder.
9: If higher payments are creating financial pressures, remember you have options
If you’re concerned about renewing within a higher rate environment, the good news is that renewal isn’t an all-or-nothing decision.
Depending on your individual circumstances, options may include:
- Refinancing your mortgage
- Consolidating higher-interest debt
- Adjusting your amortization period (where eligible)
- Changing your payment frequency
- Making a lump-sum payment before renewal
- Switching lenders if another mortgage better meets your needs
And—most importantly, don’t wait until the last minute.
Many lenders allow homeowners to begin discussing renewal options 90 to 180 days before their mortgage matures. Starting early gives you more time to compare products, understand your choices, and make informed decisions without unnecessary pressure.
At the end of the day, your mortgage renewal is an opportunity—not just a deadline.
Whether you’re looking to manage higher payments, pay down debt faster, improve monthly cash flow, or plan for the next stage of your career, mortgage renewal time is a chance to ensure that your chosen path continues to support the life you’re wanting to build.
