Mortgage renewal: a good moment to reassess

Last reviewed October 30, 2026

A mortgage renewal letter can feel like routine paperwork. But for many homeowners in their fifties and sixties, renewal is a natural decision point: a chance to step back and ask whether the current home, and the current mortgage, still fit your plans.

How renewal works

Most Canadian mortgages have a term, often five years, that's shorter than the amortization. At the end of each term you renew, usually with your current lender, though you can switch. Your lender must send a renewal statement in advance (federally regulated lenders must give at least 21 days' notice, per the Financial Consumer Agency of Canada; credit unions follow provincial rules, so ask yours). Some key points:

• You don't have to accept the first offer. Rates are often negotiable, and you can compare with other lenders.
• Switching lenders at renewal has become easier. Since November 21, 2024, federally regulated lenders no longer have to apply the stress test to a "straight switch" at renewal (same balance and amortization), per OSFI. Refinancing or increasing the balance still means qualifying again, so check current rules with a broker.
• Renewal is a chance to change your term, payment schedule or amortization, within the lender's rules.

Your options at renewal

1. Renew and stay

If the home works for you and the payment fits your budget, renewing is simple. Consider whether to make larger payments to be mortgage-free before or soon after retirement.

2. Refinance

Refinancing means taking out a new, larger mortgage to access equity, for example to renovate for accessibility, help family, or consolidate debt. It requires qualifying again, including the stress test, and may carry costs. It's best for people with stable income who want to stay in the home.

3. Reverse mortgage

Available to homeowners 55 and older, a reverse mortgage lets you borrow against your home's equity without making regular payments. The loan, plus interest, is repaid when you sell, move out or pass away. It can let you stay at home while accessing cash, but interest rates are typically higher than conventional mortgages and the balance grows over time, reducing the equity left for you or your heirs. Get advice from a lawyer or financial advisor and involve family in the conversation.

4. Sell and downsize

If the home has become more than you need, renewal is a natural time to consider selling. If you're near the end of a term, you may also avoid or reduce a prepayment penalty. Ask your lender about the costs of paying off your mortgage early, and whether a shorter renewal term (or an open mortgage) would give you flexibility while you decide.

Questions to ask yourself before you renew

• Do I expect to be in this home at the end of the new term?
• Will my income change during the term, for example through retirement?
• Would I like to be mortgage-free by a certain age?
• Are there big repairs coming that I'd rather not pay for?
• Would freeing up equity improve my retirement?

Questions to ask your lender

• What rates and terms can you offer, including shorter and open terms?
• What would the prepayment penalty be if I sold partway through?
• Is my mortgage portable to a new home?
• Can I increase my payments or make lump-sum prepayments?

Running the numbers on downsizing

To see what downsizing would free up, you'll need three numbers: what your home would likely sell for, what your next home would cost, and the transaction costs on both sides. A local agent can provide the first, and help with the second, by showing you recent sales of homes like yours and homes like the one you'd buy. Your lawyer can estimate the transaction costs. Then a financial advisor can show how the freed-up equity would affect your retirement plan.

Don't decide under pressure

If your renewal date is close and you're undecided, renewing for a short term buys you time without locking you in. It's better to make a thoughtful decision about your home than a rushed one driven by a renewal deadline.