Time to Renew? Mortgage Tips for 2025

If your mortgage is up for renewal this year, you’re probably wondering what to expect in the current market. With shifting interest rates, evolving lender policies, and higher equity values, this renewal cycle may look different from your last one.

Before We Get Into It…

Something we’ve noticed over the last year is that lenders and banks are being, well, very aggressive in their renewal rate offers to keep you as a client.

Here’s our soapbox moment.

Getting the lowest interest rate feels good. We get that. If the rate and mortgage terms match your goals, well, then it’s a match made in heaven. But, if you’re picking just on rate alone, it’s time to take a step back and look at the bigger picture. Is the rate worth locking in for five years on a home you’ve outgrown? Is it worth paying more in other debt payments that outweigh the interest payment on your mortgage for the year?

Just our two cents.

The Mortgage Renewal Landscape in 2025

Canada’s mortgage market is in the midst of a major transition… well, maybe a couple.

It’s estimated that over half of all mortgages in the country will be up for renewal between 2025 and 2026. Now, we’re not entirely sure if this number is accurate, but we know from our database that the majority of clients are renewing this year.

Many homeowners who locked in historically low rates during “the COVID times” are now facing higher rates upon renewal. It’s not that these rates are the highest they’ve ever been, but there is still a bit of shock when you go from 1.75% to 4.5%.

What to Consider at Renewal Time

When your mortgage term expires, you do not have to simply accept your lender’s renewal offer and sign the paperwork.

This is a great opportunity to explore your options, including switching lenders if a better deal is available and leveraging some equity.

Interest Rates and Market Trends: We cannot overstate how important it is to shop around. The Bank of Canada has hinted at more rate cuts this year, but rates remain elevated compared to the ultra-low levels of previous years. If you are renewing this year, locking in for a shorter term might give you flexibility for future rate drops.
Lender Policies: Some lenders may offer better rates or incentives to retain borrowers, while others might have stricter qualification criteria than before.
Negotiating With Your Current Lender: Your lender will send a renewal offer, but don’t accept it without asking a few questions first. In many cases, better rates or terms may be available if you just ask. You may also use competing offers as leverage to negotiate a better rate (you can ask for your mortgage broker’s help with this as well!)
Switching Lenders: If another lender offers a lower rate or better terms, switching may be a smart move. While there may be some penalties involved, depending on your mortgage, a mortgage broker can help you determine if the savings outweigh the expenses.
Market Conditions: The 2025 spring housing market is expected to be competitive, with the Canadian Real Estate Association (CREA) forecasting a 4.7% increase in average home prices. Buying may not be in the cards for this year, but leveraging equity to complete renovations or pay down debt? That might be a better fit.

Refinancing: Is It a Better Option?

Renewal is also an opportunity to consider refinancing. Refinancing allows you to access home equity, consolidate debt, or change your mortgage structure to better suit your financial goals.

Here’s when refinancing might make sense:

You need to free up cash flow: If you’re struggling with debt or other financial obligations, refinancing can help lower your monthly payments.
You want to access home equity: If your home has appreciated in value, you could tap into that equity for renovations, investments, or other financial needs.
You’re considering a different mortgage type: If your financial situation has changed, you may want to switch from a variable to a fixed rate (or vice versa) to better align with your long-term goals.

You Have Received Your Renewal Offer: What Do You Do

Current Interest Rates: Compare your lender’s offer with rates from other institutions to ensure you’re getting the best deal. Ask a mortgage broker to help with this since what you see online is typically not what you will receive.
Your Financial Goals: If you need access to funds for renovations, investments, or debt consolidation, refinancing may be a better option. In the last year, there have been significant mortgage changes that allow you to access up to 90% equity if building a legal secondary suite.
Term Flexibility: What do the next five years look like? Does locking in for another five years make sense, or would securing a three-year term fit better?
Payment Structure: If you anticipate changes in income, explore options like increasing your payment frequency or choosing a variable rate. This gives you additional flexibility should something change in your financial situation.
Prepayment Privileges and Penalties: Look at how flexible your lender is in allowing lump sum payments or early payouts without penalties. If you’re worried about having a higher interest rate, paying down your principal will save you in the long run.

Preparing for Your Renewal

Here’s what we recommend if you’re renewing this year.

Start Early: Don’t wait until the last minute. Begin reviewing your options at least six months before your renewal date, especially if you are considering refinancing. Getting all that paperwork organized takes time!
Check Your Credit Score: A strong credit score can help you secure better mortgage rates and terms. Starting early will get you on the right track if you need to boost your credit score a bit.
Work with a Mortgage Broker: At this point, we feel like this one is self-explanatory.

Mortgage renewal isn’t just about signing the offer you get. It’s an opportunity to reassess your financial strategy.

Whether you choose to renew with your current lender or explore refinancing options, taking the time to compare offers can save you thousands over the life of your mortgage. And if you need help navigating your mortgage renewal, we’re here for you.