My Mortgage Was 1.89%. Now It's Renewing at 4%+.
How to calculate your new payment and what you can actually do about it.
If you locked in between 2020 and 2022, you likely landed somewhere between 1.5% and 2.4%. That was not normal. It was the lowest rate environment Canada had ever seen, and it lasted just long enough for millions of borrowers to build their monthly budgets around it.
Now those terms are ending.
Over $900 billion in Canadian mortgages are renewing through 2025 and 2026. Most homeowners are looking at rates that are double, sometimes more, what they originally signed.
If you opened your renewal letter and felt a knot in your stomach, that reaction is completely normal.
Here is something worth saying clearly, though. Yes, you passed the stress test at 5.25%. That qualification was real. It means your mortgage was originally approved with higher payments in mind. But qualifying for a payment and absorbing it comfortably are not the same thing. Since you bought, groceries moved up, insurance moved up, property taxes moved up. Some households also took on more debt or had income change. Passing the stress test says you can carry the load. It does not say the load will feel light.
Most homeowners have more control over what happens next than they realize.
What the increase actually looks like
Here are the numbers, pulled against real rate combinations we are seeing in renewal offers right now.
Payment Shock Table — Real Scenarios
How much more per month? Based on 20-year remaining amortization and Canadian semi-annual compounding.
| Original Rate | Renewal Rate | $300,000 | $500,000 | $700,000 |
|---|---|---|---|---|
| 1.57% | 3.79% | +$324/mo | +$539/mo | +$755/mo |
| 1.79% | 3.79% | +$293/mo | +$489/mo | +$684/mo |
| 1.89% | 4.04% | +$318/mo | +$530/mo | +$742/mo |
| 2.09% | 4.04% | +$290/mo | +$483/mo | +$676/mo |
| 2.14% | 3.89% | +$259/mo | +$432/mo | +$605/mo |
| 2.39% | 3.89% | +$224/mo | +$373/mo | +$522/mo |
Assumes 20-year remaining amortization at renewal. Actual amounts depend on your specific balance and amortization. All calculations use Canadian semi-annual compounding per the Bank Act.
On a $500,000 mortgage with 20 years remaining, moving from 1.89% to 4.10% adds roughly $550 to $600 per month. On $600,000, that same move is closer to $660 to $720. The numbers are real and they are not small.
There is one offset worth noting. You have been paying down principal for several years. Your balance today is lower than when you started, which softens the increase slightly. Not enough to ignore it, but enough that the jump is not quite as large as the raw rate comparison suggests.
See your exact number
Plug in your current balance, remaining amortization, and the rate you are being offered. Whatever comes out is your baseline. Everything else on this page is about bringing that number down.
Payment Shock Calculator
See exactly how your renewal rate change affects your monthly payment — using Canadian semi-annual compounding.
Current Payment
$2,001
at 1.89%
New Payment
$2,477
at 4.29%
Monthly Increase
+$476
+23.8%
Annual Impact
+$5,712/year
5-Year Term Impact
+$28,562 extra
Amortization Extension Relief Valve
Extending to 25 years would reduce your new payment to $2,167/mo (saving $310/mo) — but you'd pay an extra $55,655 in total interest over the life of the mortgage. Use this as a short-term relief strategy, not a permanent solution.
Five ways to reduce the shock
You do not have to accept the number your lender sends. That is the starting offer, not the final one.
1. Negotiate the rate down
That renewal letter is not their best rate. Lenders price it higher because many clients sign without questioning it. Most people who call in with a competing offer get a better number. A typical reduction runs 0.10% to 0.30%, sometimes more.
On a $500,000 mortgage, a 0.20% drop is roughly $55 per month. Get a written quote from a broker or another lender first, then call your bank's retention team and ask them to match it.
2. Extend your amortization
If you have 20 years remaining and move back to 25, your monthly payment drops noticeably. On a $450,000 balance at 4.25%, that extension can free up $200 to $300 per month.
The trade-off is real: you pay more interest over time. Use amortization extension to relieve immediate pressure, not as a permanent fix. When your situation improves, aggressive prepayments close the gap. In some cases you can even stretch back to 30 years, though that is a bigger trade-off and not every lender offers it.
3. Make a lump-sum prepayment before renewal
Most mortgages allow annual prepayments of 10% to 20% without penalty. Applying savings before your renewal date lowers the balance your new payment is based on.
Putting $20,000 toward a $500,000 mortgage before renewing at 4% reduces your monthly payment by roughly $100 and cuts total interest paid over the rest of the amortization. It is one of the few moves that improves both cash flow and long-term cost simultaneously.
4. Switch lenders
Renewal is one of the only points in a mortgage cycle where you can move without paying a penalty. Monoline lenders and credit unions often come in 0.20% to 0.40% lower than the major banks because they carry less overhead.
The process requires re-qualifying under the stress test, so start at least 90 to 120 days before your maturity date. Do not leave it to the last month.
5. Ask about a blend-and-extend
If your term has not matured yet, some lenders will combine your current rate with today's rates and roll you into a new term. The result lands somewhere in between.
One important thing to understand: the cost of breaking your current term does not disappear. It gets folded into the blended rate. You are still paying it, just not as a visible line item.
On the emotional side of this
People describe the jump from 1.94% to 3.95% as feeling “gross.” Someone else at 1.79% said they were nervous for months before the letter even arrived. That reaction is not irrational.
Rates in the 3.5% to 4.5% range are historically ordinary. But historically ordinary does not mean personally easy, especially when the increase lands at $500 to $700 a month on a household that has already absorbed three years of rising costs on everything else. Some households will move through this without much disruption. Others will feel real pressure. Both outcomes are legitimate.
The difference, in most cases, is whether you act early or wait for the letter to decide for you.
Start here
Get your exact payment increase first. Plug your current balance, remaining amortization, and the rate you are being offered into a renewal calculator. That number is your baseline.
Then pick your levers. Rate negotiation and amortization adjustment are the most common starting point. Most people combine two or three strategies rather than relying on one.
Start shopping 120 days before maturity. Competing written quotes are what create negotiating leverage. Without them, you are asking for a favour. With them, you are a client the bank might lose.
And do not sign the first offer. That is where most of the money gets left on the table.
Common questions
Related Guides
The Complete Mortgage Renewal Guide
Timelines, stay-vs-switch, and the full renewal playbook.
How to Negotiate Your Renewal Rate
The exact language that moves a renewal offer 30 to 50 basis points lower.
Extending Amortization at Renewal
When stretching to 25 or 30 years makes sense and what it costs.
Switching Lenders at Renewal
How the process works, what it costs, and when it saves you money.
Camilo Rodriguez
Founder of Mortgages Lab & Mortgage Expert
Camilo Rodriguez is the Founder of Mortgages Lab, a licensed mortgage broker with over 23 years of experience helping Canadians achieve financial freedom. He has trained 100+ mortgage agents across Canada and is Past President of The Canadian Mortgage Broker Association - BC. He is the author of "From Debt to Zero," a guide to becoming mortgage free.
P.A.Y.O.F.F™, L.A.B™, M.A.P™ are Trademarks of Mortgages Lab®
Financial Disclosure
This page contains informational content only and does not constitute financial advice. Mortgage rates shown are sourced from publicly available lender data and may change without notice. Always verify rates directly with the lender. Mortgages Lab may receive compensation from partner lenders, which does not influence our editorial content or rate rankings. Built on Real Experience — 23+ years of working with real mortgage scenarios and helping Canadians achieve financial freedom.
Know your number. Then act on it.
See what lenders are actually offering today and start shopping before the renewal letter decides for you.