Renew a $420,000 balance from 3.2% to 4.6% with 20 years left, and the payment climbs from $2,367.10 to $2,669.96 a month. That is $302.86 more each month, or $3,634 a year. Enter your own balance and your lender’s offered rate to see the change.
What happens at renewal
Your term ends, usually after five years. The amortization keeps running. You then sign a new term at whatever rates are on offer. The balance carried over and the years left on the amortization set your new payment. Payment shock is common. Rates may have climbed a lot since the day you signed your last term.
Reading the result
Amortization is held steady, so the whole change comes from the rate. A small table under the result shows the payment at one point lower and one point higher than the offer. It shows what a better rate would be worth, and it shows what a worse one would cost you if the market keeps moving up before your renewal date.
Shop before you sign
Most lenders mail a renewal offer 30 to 120 days before the term ends. The first offer often isn’t the best one. Push back. Ask for a better rate, and compare against other lenders and a broker. Switching lenders at renewal generally avoids a penalty. Check who pays the legal fees, though.
Options if the payment is too high
Lengthen the amortization, which lowers the payment and adds interest. Choose a longer term for a rate you can plan around. Make a lump sum payment at renewal, since many lenders allow that without a penalty. Try each by changing the years left.
Stress test at renewal
Stay put and there is usually no new stress test. A move to another lender can involve one, depending on the mortgage type. Run the mortgage stress test calculator before you shop around.
A worked example
At a 4.6% renewal rate the payment is $2,669.96. At 3.6% it would be $2,451.68, or $218 a month less. At 5.6% it would be $2,897.62, which is $228 more. A one point change moves the payment by roughly $220 a month, so even a small rate discount can add up to thousands of dollars over a full term of five years.
Term length
A longer term gives a payment you can plan around for years. Shorter ones let you catch lower rates sooner, though renewal comes back quickly. Pick what fits. If a sale within three years is possible, a shorter term or an open mortgage can avoid a penalty.
What to bring to lenders
Bring your credit score, balance and current rate. Get a written offer from each lender covering the term, the rate, the prepayment limits and the penalty rules. Compare every part of it, because two offers with the same rate can cost very differently.
Next steps
Weigh fixed against variable with the fixed vs variable calculator. If a sale or lender change mid-term is possible, check the penalty calculator. For the full schedule, use the amortization schedule calculator.
Frequently asked questions
How is my renewal payment calculated?
From your balance, the years left on the amortization and the new rate.
When will my lender send a renewal offer?
Usually 30 to 120 days before your term ends.
Can I switch lenders at renewal?
Yes. It generally avoids a penalty, but ask about legal fees and any new stress test.
Can I change my amortization at renewal?
Often yes. A longer amortization lowers the payment but costs more interest.
Can I make a lump sum payment at renewal?
Many lenders allow it without a penalty. Ask yours.
Is the first renewal offer the best one?
Not always. Ask for a lower rate and compare other lenders.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.