Renewal shock in 2026: how it works, with a worked example

Questions people ask

Why does my payment change so much at renewal?

Because the entire remaining balance is re-priced at the new rate. On a mortgage taken out at 1.9% and renewing at 4.5%, the interest portion of every payment more than doubles, and since the amortization is unchanged the payment must rise to cover it.

Do I have to pass the stress test to renew?

Not with your current lender. If you switch lenders without increasing the loan or the amortization, insured mortgages have always been exempt and, since November 21, 2024, uninsured mortgages are exempt too. You must re-qualify if you refinance, borrow more or extend the amortization.

Should I extend my amortization to lower the payment?

It reduces the monthly payment but increases total interest and the number of years you pay. It can be the right move if the alternative is missing payments, and you can shorten it again later with prepayments. Most lenders treat it as a refinance and require you to re-qualify.

How do I get a better renewal rate?

The first offer in the renewal letter is rarely the best. Ask your lender for their best rate, get a quote from a broker or another lender, and use the competing offer. Start about four months before the term ends, which is when most lenders let you hold a rate.

Should I choose fixed or variable at renewal?

The calculator cannot answer that; it depends on where rates go. What it can show is the payment at any rate you enter, so you can see how much room you have if a variable rate rises. Try the rate you are offered plus one or two percentage points.

What is the break-even rate shown?

The renewal rate at which your payment would stay exactly the same as today, given the balance and the remaining amortization. Any offer below it lowers your payment; any offer above it raises it.

Does the calculator include prepayments I made?

No. It follows the original schedule with no extra payments. If you made lump-sum prepayments or increased payments, your actual balance is lower; enter your real balance as the original amount with the remaining amortization as the amortization to get a closer answer.

Where do I find the balance and remaining amortization?

On your renewal statement, which your lender must send at least 21 days before the term ends, or in your online banking under mortgage details. Enter those two numbers directly; the original-mortgage mode is only an estimate.

Should I extend my amortization to lower the payment?

Extending to 25 or 30 years cuts the monthly payment but adds interest over the life of the loan, often tens of thousands of dollars. The lever table shows both. A middle path is to extend now and use prepayment privileges later when your budget allows.

Do I have to pass the stress test to switch lenders at renewal?

Not for a straight switch. Insured mortgages have been exempt for years, and since November 21, 2024 uninsured borrowers switching lenders at renewal with the same amount and amortization are exempt too. Refinancing, which means borrowing more or changing the amortization at a new lender, still requires the test.

Is it worth paying to switch lenders for a lower rate?

Enter the switching costs (discharge fee, legal or registration, appraisal) and the calculator shows the rate at which the interest saved over the new term pays for them. Many lenders cover those costs to win your business; ask before you assume you will pay them.