How To Use This Mortgage Renewal Calculator
The calculator updates as you type, so you can compare several offers in a few seconds.
- Enter your balance at renewal. Your lender's renewal statement shows what you'll owe when your term ends. If you don't have it yet, your latest mortgage statement is close enough.
- Enter the years left. This is the amortization that remains, not the term. A 25-year mortgage at its first 5-year renewal has 20 years left.
- Enter your current rate. The calculator uses it to work out today's payment, so you can see how much your payment changes at renewal.
- Enter your lender's offer and the best rate you found. Use the rate in your renewal letter and the best rate another lender or a mortgage broker has quoted you for the same term.
- Pick the term and add any switching costs. Choose a term from 1 to 10 years. If moving to the other lender would cost you discharge, legal or appraisal fees, enter them. Leave the field empty if the new lender covers them.
- Review your estimate. You'll see your payment at both rates, today's payment, and what the lower rate saves you each month and over the term. The tables under the calculator put both rates side by side and show what each quarter point is worth.
If you'd like to see what other lenders can offer, use the "See if you qualify" button. It won't affect your credit score.
How The Savings Are Calculated
The calculator works out every payment the same way, so the rates are compared on the same footing:
- Monthly payment = B × i ÷ (1 - (1 + i)-n), where B is the balance at renewal, n is the number of months left on the amortization, and i is the monthly rate. Fixed-rate mortgages in Canada are compounded semi-annually, so i = (1 + rate ÷ 2)1/6 - 1.
- Today's payment = the same formula at your current rate. On a mortgage that's on schedule, that's the payment you make now, give or take a few dollars.
- Interest over the term = all the payments in the term - the principal they pay off.
- Savings over the term = interest at your lender's offer - interest at the best rate - switching costs. This counts both the lower payments and the lower balance a lower rate leaves you with at the end of the term.
Example: Renewing $400,000 with 20 years left for a 5-year term at 3.99% instead of a 4.49% offer lowers the payment from $2,519.51 to $2,414.92 a month and saves $9,334.22 in interest over the term. At 3.99%, you'd also owe $327,425.63 at the end of the term instead of $330,484.50.
How Much A Lower Renewal Rate Saves You
Every quarter point matters on a mortgage-sized balance. Here's a $400,000 balance with 20 years left, renewed for a 5-year term, against a 4.49% renewal offer:
| Rate | Monthly payment | Interest over 5 years | Saved vs. 4.49% |
|---|---|---|---|
| 4.49% | $2,519.51 | $81,654.84 | $0.00 |
| 4.24% | $2,466.93 | $76,981.66 | $4,673.18 |
| 3.99% | $2,414.92 | $72,320.62 | $9,334.22 |
| 3.74% | $2,363.48 | $67,672.23 | $13,982.61 |
| 3.49% | $2,312.63 | $63,037.03 | $18,617.81 |
Each quarter point is worth about $4,600 over five years on this mortgage. The bigger your balance and the longer your term, the more a lower rate is worth.
Why Your Payment May Go Up At Renewal
Many Canadians renewing now locked in their last term when rates were much lower. Your balance and amortization keep shrinking, but if the new rate is higher, your payment still goes up. In the example above, the payment at 2.49% is about $2,115.17 a month. Renewing at the lender's 4.49% raises it by $404.34 a month. Even at 3.99%, it goes up by $299.75.
If the higher payment is hard to manage, ask your lender about extending your amortization at renewal. Going back to 25 years at 4.49% brings the payment down to $2,211.67 a month, close to what you pay today. The trade-off is interest: if the rate stayed at 4.49% for the rest of the mortgage, you'd pay $263,500.59 in interest instead of $204,681.38, or $58,819.21 more. You can run the same numbers above by changing the years left. Read more about the maximum amortization period in Canada.
Switching Lenders At Renewal
Your renewal is the one time you can move your mortgage to another lender without paying a prepayment penalty. The new lender will need to approve you, and there can be costs:
- Discharge and registration fees to release the mortgage from your current lender and register it with the new one.
- Legal fees for the lawyer or notary who handles the transfer.
- An appraisal fee, if the new lender needs to confirm your home's value.
Many lenders cover some or all of these to win your business, so ask. Enter whatever you'd pay yourself in the calculator's "Switching costs" field to see if moving still pays off:
- A big rate gap absorbs the costs. At 3.99% instead of 4.49%, with $1,500 in switching costs, the example above still saves $7,834.22 over the term.
- A small one may not. At 4.39% instead of 4.49%, with $3,000 in costs, you'd save only $1,870.69 in interest, less than the costs. Use the better quote to negotiate with your own lender instead.
Since November 21, 2024, you don't have to pass the mortgage stress test to switch lenders at renewal, as long as you keep the same loan amount and amortization (a "straight switch"). You still have to qualify with the new lender at your contract rate. If you borrow more or extend your amortization, the stress test applies. Learn more about OSFI's stress test changes and how to switch mortgage lenders.
When To Start Shopping For Your Renewal
- About 4 months before your term ends. Many lenders will hold a rate for up to 120 days, so you can lock in an offer early and still take a lower one if rates drop.
- When your renewal statement arrives. A federally regulated lender must send it at least 21 days before your term ends, with your balance, rate, payment frequency, term and any fees. That's the minimum, so don't wait for it to start comparing.
- Before the deadline. If you don't act, your mortgage may renew automatically, and the renewal statement will say so. An automatic renewal isn't always at your lender's best rate.
For the full process, read our guide to mortgage renewals in Canada. If you want to borrow more against your home at the same time, compare it with refinancing your mortgage. Buying a new home instead? Use our mortgage calculator.