With inflation driving up the cost of living in Canada, including essential items like gas and food, and mortgage rates, which now seem to be retreating, the financial landscape for mortgage holders is becoming increasingly challenging. Many homeowners are facing potential payment increases of up to 59% when their mortgage renews. If your mortgage is nearing its renewal date, it’s not just important. It’s urgent to take proactive steps to explore strategies to reduce your mortgage payments and alleviate financial strain.

With an estimated 3.4 million Canadians set to renew their mortgages by 2025, the country faces a potential $900 billion mortgage renewal shock. The fear of unaffordable mortgage payments or the possibility of selling homes is very real for many Canadians. According to Realtor.ca, there were 37,198 new residential listings in July 2024, a 15% increase from July 2023, the highest number of new listings in Ontario’s history.

When your mortgage is up for renewal, your lender will not offer its lowest rate, but you can still find a better deal elsewhere. At Sunlite Mortgage, we work with over 60 lenders ready to compete for your business. We can help you secure a lower rate and make your mortgage payments more manageable, significantly reducing your financial stress.

For instance, if you took out a three-year fixed-rate mortgage in 2021 with a $700,000 mortgage at 1.84%, your monthly payment might have been $2,910.39. Today, the renewal rate might be 5.09%, increasing your monthly payment to $4,107.17—a 41% increase. If you had opted for a variable-rate mortgage at 1.49% in 2021, your payment could now jump from $2,794.79 to $4,437.12 with the current variable rate of around 5.90%, a 59% increase.

Lenders typically consider many factors when offering renewal terms, including a soft credit pull to check your payment history with them and other creditors. While it may seem like the renewal rate is based on your loyalty to the lender, this isn’t always the case. In fact, banks often reserve their best rates for new customers, not for those renewing existing mortgages.

Some banks may make the renewal process straightforward by sending a notice 30 days before the term ends, allowing you to choose from a few options. However, others might send a notice 60 days in advance with an inflated rate, giving you only 30 days to secure a ‘discounted rate’ often higher than a mortgage broker could offer. This underscores the importance of being proactive and exploring the market to secure the best deal for your mortgage renewal. Don’t wait. Start exploring your options now.

Surprisingly, approximately 41% of Canadian homeowners accept their lender’s initial renewal offer without considering other options. This is a significant missed opportunity, as exploring other lenders could potentially save you thousands of dollars over the life of your mortgage. At Sunlite Mortgage, we aim to prevent this oversight by providing access to over 60 lenders, giving you a wide range of options to find a mortgage that aligns with your financial needs and could save you a substantial amount of money.

There are also strategies you can consider when your mortgage is up for renewal:

1. Insured Mortgage: If you purchased your home with less than 20% down, you could switch your mortgage to another lender if you don’t change the mortgage amount, amortization, or who is listed on the mortgage. This is an excellent option if another lender offers a lower rate and term, potentially reducing your payments and helping you pay off your mortgage faster. There are no legal fees or appraisal costs to switch.
2. Collateral Transfer: If you have a collateral mortgage, you can transfer it to another lender without changing the balance, amortization, or borrowers, but you can select a term and rate that fits your financial goals. Many Canadians opted for HELOCs in the past, but with current HELOC rates around 7.30%, switching to a lower mortgage rate and saving on interest may be beneficial.
3. Refinance: If you have other debts you’d like to consolidate into your mortgage at the time of renewal, refinancing could be a better option than renewing. Refinancing allows you to increase the mortgage amount, extend the amortization, add or remove borrowers, and select a better rate and term. By consolidating high-interest debt into your mortgage, you could save up to 60% on your monthly payments, improving your cash flow and reducing financial stress.

Renewing your mortgage doesn’t have to mean higher payments and increased stress. You can find a mortgage that fits your current financial situation by exploring alternative lenders and refinancing options. At Sunlite Mortgage, we work with over 60 lenders to help you secure the best rate and term, ensuring your mortgage payments remain manageable. Don’t settle for your lender’s first offer—let us do the legwork to find you the ideal mortgage solution, helping you save money and achieve financial peace of mind. Contact a member of the Sunlite Mortgage team today to learn how we can help you easily navigate your mortgage renewal.