For homeowners across British Columbia who purchased property in 2021, the upcoming mortgage renewal cycle in 2026 presents a financial turning point. With interest rates now significantly higher than the record lows of 2021, many will face what’s being widely referred to as “payment shock” — a substantial increase in monthly mortgage costs due to rising renewal rates.
But here’s the most important fact: you are not stuck with your bank’s first offer.
Understanding your renewal rights, exploring all available options, and preparing early can lead to significant cost savings — and peace of mind. Here’s what homeowners need to know now to get ahead of their 2026 renewal.
Quick Fact:
Most renewal letters are automated offers — not negotiated deals. You don’t have to accept the first rate your lender sends.
Mortgage borrowers who locked into five-year fixed rates in 2021 were often offered rates as low as 1.5% to 2%. These were some of the lowest rates in Canadian history, driven by emergency-level monetary policy in response to the pandemic. However, by late 2024 and into 2025, the Bank of Canada had raised the overnight rate multiple times to combat inflation, pushing fixed mortgage rates to between 5.5% and 6.5%.
Let’s put this into context:
This kind of increase is what’s meant by “payment shock.” For many households in BC, particularly in high-cost regions like the Fraser Valley, this could strain monthly budgets.
This is more than just a mathematical change — it has ripple effects on everyday life. A $1,000 monthly increase in housing costs can impact everything from savings contributions to childcare budgets and day-to-day spending. For many, it could also lead to higher credit card usage or the need to take on additional work.
Payment Insight:
Even a 1% rate increase can add hundreds to your monthly payment. Always model multiple renewal scenarios.
Many lenders send renewal letters offering a new rate and term 30–90 days before your current mortgage ends. These letters often frame the process as automatic — sign and return to renew. But what’s often left unsaid is that these initial offers are rarely the most competitive. Lenders assume many borrowers won’t shop around.
You have the legal right to switch lenders at renewal without paying a penalty, because the mortgage term (not the amortization) is ending. That means you can compare offers, negotiate rates, and even work with a mortgage broker to access a wider range of options from various lenders — not just your bank.
Some lenders may also include pre-filled forms or renewal packages that make it seem like little choice is involved. But homeowners have leverage — especially with a clean payment history, stable income, and good credit. Even a small rate reduction can significantly lower the total cost of borrowing over your next term.
Don’t Auto-Renew:
Treat your renewal like a new mortgage application. You might save thousands by switching or negotiating.
Several converging factors are behind the steep increases in projected renewal costs:
Don’t wait until you receive your lender’s renewal letter. You can secure rate holds up to 180 days in advance. Early preparation gives you time to review multiple options, compare lender offers, and take steps to improve your credit or debt position if needed.
Banks often give better rates to new clients than to renewing ones. Even if you plan to stay, having quotes from other lenders or brokers strengthens your negotiating position. A 0.25% rate difference on a $500,000 mortgage saves over $6,000 in five years.
If cash flow is tight, extending your amortization reduces monthly payments. For example:
$500,000 at 5.75% over 20 years = ~$3,530/month
Over 30 years = ~$2,918/month
That’s over $600/month saved, though you’ll pay more interest long-term.
If fixed rates remain high and the Bank of Canada signals cuts, variable rates could become favourable again. They carry risk but may offer short-term relief and flexibility — especially with a shorter-term strategy in mind.
Renewal is a smart time to consolidate higher-interest debt into your mortgage. This can simplify your payments and reduce your total interest cost — especially if you’re carrying significant credit card or line-of-credit balances.
Rather than committing to a 5-year fixed rate at current highs, you may want to consider 1- to 3-year terms if rate cuts are expected. This provides flexibility — but requires comfort with possible future rate volatility.
Brokers can access dozens of lenders and often secure better terms — especially for those with strong credit or non-traditional employment. Most brokers are compensated by the lender, meaning no direct cost to you.
Broker Advantage:
Brokers work in your interest — not the lender’s — and can often find options banks won’t offer.
There are no penalties to switch lenders at the end of your term. However, if you change lenders, you must requalify — including income, credit check, and sometimes a new property appraisal. If your financial situation has changed since 2021, this could impact your ability to move lenders.
Staying with your current lender usually avoids this requalification step. However, alternative and monoline lenders may have more flexible criteria than major banks — making switching still possible for many.
Begin by reviewing your mortgage documents so you know your remaining balance, amortization period, and maturity date. This clarity helps you determine what options are available and what changes might be possible. Next, take a close look at your credit — paying down debts and avoiding missed payments can help improve your score, making it easier to qualify for better terms if you decide to switch lenders.
Request a rate hold as early as 120 to 180 days before your renewal date. This allows you to secure a competitive rate while still exploring alternatives. At the same time, speak with a mortgage broker. Their access to multiple lenders and specialized products can give you a broader view of what’s possible beyond your current financial institution’s offerings.
Use online mortgage calculators to simulate different payment scenarios based on rate, term, and amortization. This will help you see how potential changes impact your monthly budget and long-term interest costs. Don’t forget to consider your personal plans — if you’re thinking of moving, refinancing, or making a large purchase, these factors should influence your renewal strategy.
Finally, gather the necessary documentation early. This typically includes T4S, recent pay stubs, bank statements, and notices of assessment from the CRA. Having everything prepared in advance helps streamline the renewal process, especially if you’re switching lenders and need to requalify.
Mortgage renewal in 2026 will feel very different from what many homeowners experienced in 2021. But the worst thing you can do is ignore the situation or accept your lender’s default offer without exploring your options.
With preparation, comparison, and professional advice, it’s possible to manage — and even soften — the impact of payment shock. Don’t assume your current lender has your best deal. Ask questions, challenge offers, and use this as an opportunity to re-align your mortgage with your current goals and financial situation.
Letting a mortgage broker advocate on your behalf can uncover better rates, longer amortizations, or flexible terms that fit your needs — potentially saving thousands over the life of your loan.
Your bank’s first offer is never their best. You’ve got options. Make sure you explore them.
Yes. Once your term ends, you’re free to switch lenders without early payout penalties. However, switching typically involves a full requalification, including a credit check and proof of income.
Generally, no. Most lenders do not require requalification if you’re simply renewing your existing mortgage, not refinancing or increasing the amount.
Yes. It spreads your loan over more years, reducing the monthly cost. However, you’ll pay more interest over time.
Yes. Many lenders and brokers offer rate holds 120–180 days in advance, protecting you from increases while you explore your options.
It depends. A shorter term can give you flexibility if you think rates will drop — but if they don’t, you’ll face another renewal sooner, possibly at higher rates.
