If you took out a five-year fixed mortgage in 2021, you locked in at roughly half of today’s rates. That was a smart move at the time. The challenge is that your renewal letter is now landing in the mailbox, and the new payment is real money.
The Bank of Canada’s most recent analysis put a number on it: the average fixed-rate borrower renewing this spring is paying about $622 more per month than they were paying in December 2024. That’s a 24% jump. For most of the homeowners I speak with in Waterloo Region, the increase falls between $400 and $900 per month, depending on the original loan size and what they signed in 2021.
This is not a piece about whether rates will fall later this year. Bond yields have eased a little; the Bank held at 2.25% in April, and again on June 10. Beyond that, anyone telling you exactly what happens next is guessing. What I want to talk about is the part you can actually control — the structure of the renewal itself.
- Shop the renewal — don’t just sign the letter
Roughly seven in ten Canadians sign their renewal letter without comparing. The renewal letter is the lender’s opening offer, not their best one. When your mortgage is up for renewal, every lender in the country can compete for it, and the cost of switching is low — often zero, as some lenders cover legal and appraisal fees on a straight transfer.
A Waterloo example from earlier this year: a young family in Kitchener locked in at 1.99% in 2021 on $550,000 with a 30-year amortization. Original payment: about $2,030 a month. The renewal letter from their existing lender quoted 4.74%, putting the new payment at roughly $2,720 — a $690 monthly increase. A straight transfer to a competing A-lender at 4.29% brought the payment to about $2,600. Same product, same security, $120 a month back in their pocket, no closing costs. Over a five-year term, that’s roughly $7,200. This is the easiest win on the list, and the one most often left on the table.
- Extend the amortization — if the cash flow gap is real
If the new payment genuinely doesn’t fit your monthly budget, you have a structural option: reset the amortization to 25 or 30 years at renewal. The Bank of Canada estimated that about half of borrowers facing higher payments could eliminate the increase entirely by extending amortization by five years.
That’s not a free choice. You pay more interest over the life of the loan, and you finish your mortgage later. But it can be the right call if the alternative is to put groceries on a credit card or skip RRSP contributions. The trade-off I usually walk clients through: keep the longer amortization to stabilize cash flow, then use the lender’s prepayment privilege (typically 15–20% lump-sum and 15–20% payment increase per year) to chip away at the principal when bonuses, tax refunds, or raises hit. You get cash-flow relief without locking yourself into a longer schedule forever.
- Consolidate before you renew, not after
Renewal is also the cleanest moment to clean up other debt. If you’re carrying a $25,000 car loan at 8%, $15,000 on a line of credit at prime + 1%, and a credit card balance you’ve been chasing for two years, the math of folding all of it into a refinance at 4.3% is often dramatic — not because the mortgage rate is low, but because consumer debt rates are so much higher.
A homeowner with $40,000 of non-mortgage debt paying roughly $1,100 a month across those balances can frequently cut their total monthly outflow by $500–$700 by consolidating, even after the mortgage payment increases. The key word is “before” — refinancing while you’re already at renewal avoids paying a prepayment penalty to break the existing mortgage early. The two transactions blend into one. This isn’t right for everyone: if you’ve struggled to keep credit cards paid down, rolling them into your mortgage just clears the runway to do it again.
What to do in the next 30 days, if your renewal is within six months:
- Pull up your renewal letter (lenders must send it 21 days before maturity, but most send it 90–120 days out).
- Ask for a side-by-side quote from at least one competing A-lender before you sign.
- If the new payment is uncomfortable, get a clear answer on whether extending amortization solves it before assuming you must break the mortgage.
- If you have any non-mortgage debt over 6%, run the refinance math even if you don’t think you “need” it.
The renewal letter is a deadline, not a verdict. There’s almost always more room to move than the letter implies — but only if you start before the maturity date, not after. If you’d like a no-pressure look at your specific numbers, book a 20-minute call at https://calendly.com/darrylkraemermortgages/mortgage-strategy-call.