Renewing Your Mortgage in 2026: The 120 Day Playbook

If your mortgage comes up for renewal in the next year, here is the short version: start shopping 120 days before your maturity date, do not sign the first offer your lender mails you, and know that switching banks at renewal got much easier in late 2024. About six in ten Canadian mortgages renew in 2025 or 2026, and most fixed rate borrowers will see a higher payment. The jump is smaller than it looked two years ago, though, and you have more levers than you might think.

Renewal decisions start with knowing what you own. Get a current valuation of your home so your equity math is real, not a guess.

Why 2026 is the big renewal year

The Bank of Canada estimates that roughly 60 percent of all outstanding mortgages renew in 2025 or 2026. A huge share of those were signed in 2020 and 2021, when five year fixed rates sat near record lows. Those borrowers locked in cheap money for five years, and the bill for that timing comes due now. Think of it as a delayed repricing: the rate shock the market absorbed in 2022 and 2023 reaches these households on their renewal date, not before.

What actually happens to payments

The Bank of Canada's staff analysis, published in July 2025, put numbers on it. Compared with their December 2024 payment, borrowers renewing in 2026 face an average increase of about 6 percent. Hidden inside that average are two very different stories. Five year fixed borrowers, the 2021 cohort, face an average increase around 20 percent. Variable rate borrowers whose payments float, on the other hand, should see payments drop 5 to 7 percent, because rates have already come down from their 2023 peak.

A worked example

Say you took a $600,000 mortgage in the summer of 2021 at 1.99 percent, five year fixed, 25 year amortization. Your payment has been about $2,538 a month, and at renewal this summer you owe roughly $502,500 with 20 years left. Here is what the new payment looks like at three illustrative renewal rates. These are round numbers for arithmetic, not rate quotes; your actual offer depends on your lender, your term and the day you sign.

Notice the first row: a 4 percent renewal lands almost exactly on the Bank of Canada's 20 percent average for five year fixed borrowers. And notice the last row: stretching the amortization back out to 25 years nearly erases the payment jump. That flexibility costs you interest over the long run, because you are repaying principal more slowly. It is a cash flow tool, not free money.

Sorting out your own renewal? These three will help:

• The Mortgage Stress Test in 2026: What It Is and What It Costs You
• Rates on Hold, Recovery on Deck: What Mid 2026 Means for Etobicoke Buyers and Sellers
• What's Your Etobicoke Home Worth in 2026? What the Latest Market Data Says

The four levers

Shop early. Most lenders will hold a rate for up to 120 days. Getting a competing offer in hand four months out costs you nothing and gives you a floor. Lenders price renewal letters for the borrowers who do not negotiate; do not be that borrower.

Switch without the stress test. Since late 2024, OSFI no longer applies the stress test to a straight switch, meaning you move your mortgage to a new lender at renewal without increasing the amount or the amortization. In plain terms, another bank can now take your business without making you requalify at a rate 2 percent above your contract. That single rule change moved the negotiating leverage toward you.

Adjust the amortization. As the table shows, re-extending the schedule cushions the monthly hit at the cost of more total interest. Some borrowers do the reverse and shorten it while rates are down, which is opportunity cost thinking: every dollar of extra principal you pay is a guaranteed return at your mortgage rate.

Prepay before you renew. Most mortgages allow a lump sum prepayment each year, often 10 to 20 percent of the original balance. Money applied before renewal shrinks the balance the new rate gets charged on. If you have savings earning less than your renewal rate, the math usually favours the mortgage.

Fixed, variable, or wait for September 2

The Bank of Canada's policy rate sits at 2.25 percent after six consecutive holds, and the next decision lands September 2, 2026. Some borrowers are taking shorter fixed terms or variable rates on the theory that there is more easing to come. Others are locking five year money to buy certainty. Both positions are defensible, and anyone who tells you they know which one wins is selling something. What would change the picture: an inflation surprise pushes rates up and the lock-in crowd wins, or a weakening economy brings more cuts and the floaters win. Match the term to your budget's tolerance for surprise, not to a forecast. We are realtors, not licensed financial advisors, so treat this as background for the conversation with your broker or lender rather than a recommendation.

The bottom line

Renewal in 2026 is a moment of real leverage if you use the calendar well. Start 120 days out, get two competing offers, and decide on amortization with your eyes open. For most households the payment goes up, but the difference between signing the first letter and negotiating is often thousands of dollars over a term.

Renewal math sometimes leads to a bigger question: keep the house or make a move. We are happy to talk it through, no pressure attached.

Dave Dubbin
Real Estate Expert
Dave Dubbin & Associates
Real Estate Broker for Etobicoke and Toronto