Over the next two years, nearly 60 per cent of Canadian mortgages are coming up for renewal. A huge share of those were locked in during the cheap-money window of 2020 and 2022, when five-year fixed rates were sitting near or even below two per cent. Those borrowers are about to renew into a very different world. If you are one of them, here is an important thing to understand: A renewal is not paperwork. It is the single biggest financial decision you will make this year, and the default option your lender mails you is almost never your best one.

Payment shock

If you locked in around two per cent in 2021 and you are renewing this year, you are likely looking at a rate somewhere in the low-to-mid four-per-cent range today. On a $500,000 mortgage, that is not a rounding error. Depending on your amortization, you could be looking at several hundred dollars more per month, and for some households closer to $700 or $800. That is real money, and it lands all at once. The borrowers who handle this well are the ones who saw it coming and started planning months ahead. The ones who struggle are those who opened the renewal letter three weeks before maturity and signed it to make the problem go away.

The letter your lender sends you is a trap

When your mortgage comes up for renewal, your current lender will send you a renewal offer. It is convenient. It requires nothing from you except a signature. And that is exactly the problem. Lenders know that most people renew automatically. Industry surveys have consistently shown that a large majority of borrowers simply sign with their existing lender without negotiating or shopping around. That convenience tends to come at a cost, because the rate on that letter is frequently higher than what the same lender would offer a customer who walked in the door today, and almost always higher than what you could get by shopping the wider market.

The pro of signing the renewal letter: It takes a few minutes and there is no paperwork, no re-qualification, no appraisal.

The con: You may be leaving a meaningful amount on the table over your next term, often more than enough to justify a few hours of effort. The potential to save thousands of dollars is definitely worth an hour or two.

My take: Treat the renewal letter as the floor, not the offer. It is the number your lender hopes you'll accept, not the best they can do. This is the time to shop around.

The renewal is your one no-penalty window. Use it

Here is something a lot of borrowers don't fully appreciate. Breaking a mortgage mid-term can trigger painful penalties, especially on a fixed term where the Interest Rate Differential can run into thousands of dollars. But at renewal, that penalty disappears. Your term is up. You are free to move your mortgage to another lender at no cost beyond some basic paperwork. That makes the renewal window the one moment in your mortgage life when you have maximum leverage and minimum friction. You can switch lenders, renegotiate your terms, change from fixed to variable or the reverse and adjust your amortization, all without a penalty. Squandering that by auto-signing is a genuinely expensive habit.

Should you go fixed or variable this time?

I won't relitigate the whole fixed-versus-variable debate here, but renewal forces the question, so it's worth thinking about it. The rate environment remains genuinely uncertain. The Bank of Canada has held steady through the first half of 2026, inflation has drifted back up largely on energy prices and economists are split on where things go from here. Nobody shopping for a renewal should be making this call based on a confident prediction, because there isn't one to be had. In that kind of fog, a shorter fixed term, in the two-to-three-year range, continues to look like a sensible middle path for a lot of households. You get payment certainty through the uncertainty without committing to a full five years at today's levels.

The pro of a shorter fixed term: Certainty now, with the flexibility to reassess in a couple of years if the picture clears.

The con: If rates fall meaningfully, you'll be reviewing your options again sooner, and a shorter term can carry a slightly higher rate than the headline five-year.

Start the conversation before the letter arrives

The biggest mistake I see is timing. Most lenders will let you lock in a rate hold well before your maturity date, often up to 120 days out. That window is a free option. If rates rise, you're protected at the held rate. If they fall, you simply take the lower one. There is almost no scenario where starting early hurts you. So, the move is simple: Don't wait for the letter. Mark your maturity date, count back about four months, and start the conversation with your lender and another party, such as with a mortgage broker for a second opinion. That gives you time to shop, get a second set of eyes on the offer, and to switch lenders if the math says you should, all without the pressure of a looming deadline.

The bottom line

A renewal feels like a formality. It isn't. It's a rare moment of leverage, and how you handle it can easily be worth thousands of dollars over your next term.

• If your renewal is within the next four months: Ask your current lender for a rate hold now, so you're protected while you shop around.
• Don't auto-sign the renewal letter. Treat it as a starting point and find out what the broader market would offer you.
• Remember that renewal is your penalty-free window to switch lenders or change your mortgage structure. It won't come around again for years.
• Get a second opinion before you sign. A mortgage broker can shop the wider market for you and tell you plainly whether your renewal offer is competitive or not.

The cheap-money era that defined your last mortgage is over. The good news is that a renewal handled well, rather than handled fast, is one of the few financial moves where a few hours of effort can pay for itself many times over.