What Happens When Your Mortgage Renews at a Higher Rate
The payment increase on real balances, and the four levers that bring it back down
If you locked a five-year term in 2021, your renewal is going to cost more than your current payment. That is not a possibility to plan around, it is arithmetic, and the sooner you see the actual number the more options you have.
This page shows you what the increase looks like on real balances, and then works through the four levers that can bring the payment back down. Some of them cost you nothing. One of them costs a great deal over time and is still sometimes the right call.
How Much More Will Your Payment Actually Be?
Today the Bank of Canada’s policy rate sits at 2.25% and prime is 4.45% (Bank of Canada, 2026). Best available five-year fixed pricing has been near 3.94%, though it moves with bond yields and has drifted up through August.
Here is the step up from a 2.00% expiring term to 3.94%, assuming you keep your existing amortization schedule with 20 years remaining:
| Remaining balance | Old payment (2.00%) | New payment (3.94%) | Monthly increase | Annual increase |
|---|---|---|---|---|
| $300,000 | $1,516 | $1,803 | +$287 | +$3,444 |
| $400,000 | $2,022 | $2,405 | +$383 | +$4,591 |
| $500,000 | $2,527 | $3,006 | +$478 | +$5,739 |
Illustrative. Assumes Canadian semi-annual compounding and no change to amortization. Your figures depend on your balance, remaining amortization, and the rate you actually qualify for.
Find your balance on that table and sit with the number for a moment. That is the real starting position, and every option below is measured against it.
Can You Lower the Payment by Extending Your Amortization?
Yes, and this is the single most effective lever available at renewal. It is also the one with the largest long-term cost, so it deserves a straight explanation rather than a sales pitch.
Extending your amortization means stretching the remaining balance over more years. The payment drops because you are repaying principal more slowly. Here is what that looks like on a $400,000 balance at 3.94%:
| Amortization | Monthly payment | vs 20-year | Total interest paid |
|---|---|---|---|
| 20 years | $2,405 | baseline | $177,100 |
| 25 years | $2,091 | −$313/month | $227,327 |
| 30 years | $1,889 | −$516/month | $279,866 |
Illustrative, assuming the rate holds for the full amortization. In practice you renew several times, so total interest will vary.
Read both columns together. Going from 20 years to 25 knocks $313 a month off the payment and costs roughly $50,000 in additional interest. Going to 30 years saves $516 a month and costs roughly $103,000.
That trade is not automatically bad. If the alternative is genuine financial strain, missed payments, or selling a home you want to keep, extending the amortization is the correct decision and the interest cost is what you pay for stability. What it should never be is a default you slide into without seeing the second column.
Two practical limits: not every lender will extend amortization on a straight switch, and insured mortgages have caps on maximum amortization. If extending is central to your plan, tell us early so we shop lenders who can actually do it.
What Are Your Other Options?
Shorten the term instead of the amortization. A three-year fixed rather than a five-year lets you re-price sooner. If you believe rates come down, a shorter term means you are not locked at today’s level until 2031. The trade is that shorter terms sometimes price slightly higher, and you take on the risk that rates are worse when you renew again.
Shop the entire lender market. Your existing lender’s mailed offer is priced on the assumption you will not look elsewhere. The gap between that letter and what a broker can source is frequently 30 to 50 basis points. On a $400,000 balance, 40 basis points is about $80 a month. That is the cheapest lever on this page because it costs you nothing but a phone call.
Ask about blend and extend. Some lenders will blend your existing rate with current pricing into a new weighted rate, softening the step up rather than taking it all at once. Availability varies by lender and it is not always the better deal once you run it out, but it is worth asking.
Use your prepayment privileges before you renew. Any lump sum you put against principal before maturity reduces the balance the new rate applies to. If you have savings sitting idle and a payment increase coming, this is a direct offset.
What If You Are in a Variable Rate?
Variable-rate holders are in a different position, and generally a calmer one right now.
Your rate is prime minus a discount, and prime has not moved since October 2025. Your payment has been stable all year. At renewal you are re-negotiating the discount off prime rather than absorbing a jump from a 2021 fixed rate.
The thing to watch on variable products with fixed payments is the trigger rate: the point at which your payment no longer covers the interest accruing, and your balance starts growing instead of shrinking. If your lender has contacted you about a trigger rate or trigger point, treat it as urgent rather than informational. Renewal is the natural moment to fix it, either by increasing your payment, making a lump sum, or moving to a fixed rate.
What Should You Not Do?
Do not ignore the renewal letter. If you do nothing, most lenders roll you into a new term automatically, frequently at a posted rate well above anything you could have negotiated. Doing nothing is the most expensive option available to you.
Do not choose variable purely because the payment looks smaller. A lower payment today that you cannot sustain through a rate increase is not a solution. Choose variable because you can carry the risk, not because you need the payment.
Do not wait until the maturity date to start. Options narrow sharply inside the last month. At 120 days out you can hold a rate, shop lenders, and negotiate. At 10 days out you sign what is in front of you.
Do not assume your current lender will match a competing offer without being asked. Many will. Almost none volunteer it.
When Should You Start?
120 days before your maturity date. That is the window in which most lenders will hold a rate for you, and a hold works entirely in your favour: if rates rise you keep the held rate, and if they fall you re-shop. We cover the mechanics in rate holds explained.
Starting at 120 days also leaves enough runway to switch lenders if the numbers point that way. That process, and what it costs, is covered in switching lenders at renewal.
Frequently Asked Questions
How much will my mortgage payment go up at renewal?
On a $400,000 balance with 20 years remaining, moving from 2.00% to 3.94% adds roughly $383 a month, about $4,591 a year. On $300,000 it is closer to $287 a month, and on $500,000 about $478.
Can I extend my amortization to lower my renewal payment?
Usually yes. On a $400,000 balance at 3.94%, going from a 20-year to a 25-year amortization reduces the payment by about $313 a month, at a cost of roughly $50,000 in additional interest over the life of the loan.
Is it better to take a shorter term if rates are high?
It can be. A three-year term lets you re-price sooner if rates fall, rather than locking today’s rate for five years. The trade-off is that you carry the risk of renewing again into a worse market.
What happens if I just let my mortgage renew automatically?
Your lender rolls you into a new term, often at a posted rate materially above what you could have negotiated. It is the most expensive way to renew.
Can I make a lump-sum payment before renewing?
Yes, within your prepayment privileges. Any principal you pay down before maturity reduces the balance your new rate applies to.
Get the Real Number Before You Decide
Every figure on this page is an illustration. Your actual increase depends on your balance, your remaining amortization, and the rate you qualify for today. That calculation takes a few minutes and it is the difference between planning and guessing.
Call 780-974-1270 or get in touch, and read the full guide to mortgage renewal in Alberta for the whole process.
