Renewal Shock

Your term is ending. The rate you locked in five years ago no longer exists, and its replacement might look nothing like your current payment. This calculator shows the new number before the renewal letter does — the payment at the offered rate, how far it moved, and what a few other rates would do.

What it answers

• Your new monthly payment at the renewal rate your lender offers.
• The change versus your current payment, in dollars per month and per year.
• The payment under higher and lower rate scenarios, so you can see what waiting or negotiating is worth.
• Whether extending your amortization to soften the blow is worth the extra lifetime interest.

What it deliberately does not cover

It does not shop for rates or judge whether your lender's offer is competitive. It does not model variable-rate payments that move with every Bank of Canada decision, and it does not calculate prepayment penalties if you break your term early to renew ahead of schedule. It assumes the balance and amortization you enter are correct — it cannot pull them from your lender.

Every input, explained

Current mortgage balance. What you still owe, from your latest statement or lender portal. The common error is entering the original loan amount, which overstates the new payment.

Current interest rate. The rate on your expiring term, from your renewal letter or statement. Check the paper rather than trusting your memory of five years ago.

New rate offered. Your lender's proposal, or a competitor's rate you are considering. Enter it exactly as quoted.

Remaining amortization. Years left until the mortgage is paid off — not the original term. After one 5-year term on a 25-year mortgage, you likely have 20 left. Entering 25 instead understates the payment.

Payment frequency. Monthly, semi-monthly, bi-weekly, or weekly. Accelerated bi-weekly payments reduce principal faster than the standard schedule assumes, so treat those results as approximate.

How the math works

Monthly payment = balance × monthly rate ÷ (1 − (1 + monthly rate)^(−number of payments)). Canadian mortgages compound semi-annually, not monthly, so the true monthly rate is (1 + annual rate ÷ 2)^(1/6) − 1, not annual rate ÷ 12 — a calculator that divides by 12 slightly understates the payment. A higher rate sends a bigger slice of each payment to interest and a smaller slice to principal.

The renewal fact that matters: renewing with your current lender means no stress test — you are not re-qualified. Switching lenders at renewal on an uninsured mortgage also skips the stress test (an OSFI change from November 2024). But switching lenders on an insured mortgage, or refinancing instead of renewing, triggers qualification at the greater of your contract rate plus two percentage points or the 5.25 percent floor.

Worked example

A Winnipeg homeowner has $485,000 remaining with 22 years (264 payments) left. The expiring rate was 2.79 percent; the renewal offer is 4.69 percent fixed for five years.

Old payment at 2.79 percent, with semi-annual compounding: monthly rate = (1.01395)^(1/6) − 1 ≈ 0.0023116. Payment ≈ $2,456 per month.

New payment at 4.69 percent: monthly rate = (1.02345)^(1/6) − 1 ≈ 0.0038707. Payment ≈ $2,936 per month.

The shock: $2,936 − $2,456 = $480 more per month, $5,757 per year — $43,256 in extra interest over the five-year term, with a larger share going to interest so the balance falls more slowly.

If the new 4.69% rate somehow held for the entire remaining 22 years — a hypothetical anchor, not a forecast, since this homeowner will renew several more times before the mortgage is paid off — the extra interest versus staying at 2.79% for the same period would total $126,657. That number exists to make the five-year figure feel smaller by comparison, not because anyone should expect a rate to hold for 22 years.

What if the borrower extends the amortization back to 25 years (300 payments) instead of accepting the higher payment on the original 22-year schedule? At 4.69 percent over 300 months, the payment drops to $2,736 — a $200-a-month saving versus the 22-year schedule. But stretching three extra years of payments onto the loan adds roughly $45,595 in lifetime interest. The calculator puts the monthly relief and the lifetime cost side by side because only one of them is the advertisement.

Provincial quirks and edge cases

• In Quebec, switching lenders at renewal means a new hypothec through a notary — $1,200 to $2,500 in fees and disbursements that eat into the savings from a better rate.
• Provincially regulated credit unions are not bound by the federal B-20 stress test, though most apply something similar. A credit union switch can occasionally qualify where a bank cannot.
• Most lenders allow early renewal, typically up to 120 days before maturity, without penalty. If rates are falling, waiting pays; if rising, renewing early locks the lower rate for the new term.
• Collateral charge mortgages cannot move to another lender without a full refinance — new appraisal, legal fees, and the stress test. A standard charge moves with a simple assignment. Check your original documents before planning a switch.

Questions to ask a professional

1. Ask your mortgage broker: "Here is my lender's renewal offer in writing — can you beat it, and what is the true cost of switching once legal fees and appraisal are included?"
2. Ask your lender: "Is my mortgage a standard or collateral charge, and does extending my amortization at renewal involve any fee or re-qualification?"
3. Ask your broker: "My mortgage is insured — if I switch lenders at renewal, will I face the stress test, and does my existing premium transfer?"
4. Ask your accountant: "I am weighing a longer amortization against investing the monthly savings — which actually leaves me ahead over the five-year term?"