Actions to Take if You're Renewing in 2025

Jacqueline Jeffries
23 hours ago
3 min read

I have been receiving a lot of questions about mortgage renewals this year. And, it makes sense. According to the Bank of Canada, about “60% of all outstanding mortgages in Canada are expected to renew in 2025 or 2026.”

Even with my own clients, many are expecting to renew in the next year.

Compared to where we were five years ago, however, rates are higher. This means that renewal rates will be higher, and therefore, mortgage payments will also be higher. Many of the questions I’m getting are around getting a lower rate or finding better flexibility with payment options.

Before we get into that, we have to make sure we’re working from the same definitions.

Mortgage Renewal = When your mortgage term is near its end, you will have to make a decision. Stay with your current lender or make a change?

You will receive an offer to renew from your lender. This will outline your new rate, terms, amortization, payment, etc. You do not have to qualify for this new offer, and if you are happy with the offer, you can sign with your lender and continue to pay your mortgage.

Mortgage Refinance = You can refinance, or restructure, your mortgage at any time during your term. However, it makes more sense to do so near the end of your term to avoid paying high penalties. You can refinance up to 80% of the value of your home, but you will have to requalify. You will also have to pay some penalty, but that is determined by the type of mortgage you have and the remaining time on your term.

Mortgage Switch: With some lenders, you can switch your mortgage to another if you find better rates, payment options, or other benefits. Again, you may still have to pay a penalty to do so.

What Action To Take At Renewal

Don’t sign the first offer you get from your lender. This is a great time to make sure you are getting the best offer from them and explore if there are other options.

I will say that many mortgage lenders have been aggressive with their renewal rates lately, which is great for you as the homeowner.

But, if you’re planning on moving in the next five years or want to do a renovation/pay for a big expense, then don’t sign. We don’t want to lock you into a new mortgage that will need to be changed only two - three years down the road.

Does It Make Sense to Refinance?

I’ve seen a lot of clients lately who have two things happening: their home’s equity has increased, and so has their unsecured debt.

If debt payments are starting to make regular expenses unmanageable, I’d encourage you to look at a mortgage refinance.

For example:

If your home value is $400,000, the maximum mortgage on a refinance is $320,000.

Your current mortgage payment is $1,647/month and your current balance is $295,000.

This leaves approximately $25,000 available equity that you can use.

If you have $25,000 credit card debt, your interest payment is approx $400/month.

You could refinance your home, pull out that $25,000 and pay off that high-interest debt for a new mortgage payment of approx $1,753/month.

That clears up $300/month.

This is just a small example. I’ve had clients where we were able to clear up over $1,500 in monthly payments just by going to pay down debt!

If you can wait until near the end of your term to refinance your mortgage, your penalty will also be lower, meaning more of the equity you pull out can go to where you need it most.

The best way to know if your lender is providing you with the best offer or if it makes sense to do a mortgage refinance or not is to send me your offer.

We can go through your options and the math to make sure it makes sense.