Mortgage Renewal Strategies and How to Save Money on Your Mortgage

Those of us who got mortgages during the COVID-19 pandemic are coming due for renewal. Ours is coming up in the next couple of months, so I have been shopping around. There is no better time to talk about mortgages, interest rates, and how to save money than right now.

Back in 2020 and 2021, rates were absurdly low. The Bank of Canada dropped its overnight rate to a record 0.25% to cushion the economy. Five-year fixed rates under 2% were common. It felt like a gift at the time. And it was - but those rates were never permanent. They were a temporary distortion, and now comes the correction.

If you locked in at 1.8% in 2021, you are about to renew into a market where the best fixed rates sit around 3.9% - 4.1%, and variable rates are in the 3.4% - 3.7% range. That is not a small difference. On a $500,000 mortgage, that is a couple hundred dollars more every single month. Millions of Canadians are in the same boat right now.

The good news is that unlike a lot of financial situations, this one gives you time to prepare. You see it coming. You can do something about it.

The first offer is not the real offer

Let me be direct about something. The renewal letter your bank sends you is not a fair offer. It is their opening position. The big banks base renewal offers on posted rates, which are considerably higher than the discounted rates they are fully capable of giving you. This is what happened to us and why I started to explore alternatives. A few hours of research and a few phone calls can save you thousands of dollars over the next term.

Most people accept it anyway. It is easy. It is familiar. You sign the paper and move on. And in doing so, you hand money directly to the bank for no reason other than not asking for better.

The math is simple. Even a 0.5% rate difference on a $400,000 mortgage translates to roughly $100–$150 per month. Over a five-year term, that is $6,000 to $9,000 you could have kept. This is exactly what happened with our default offer. The 0.5% increase is ~$170/month in our case. That is real money. That is a year of TFSA contributions, or a chunk of someone's emergency fund. It is worth a few hours of your time.

Fixed vs. variable - know what you are choosing

This question comes up every renewal. It is not complicated, but it does require you to be honest about your financial situation and your risk tolerance.

Variable rates are currently sitting around 3.4% - 3.7%. The Bank of Canada held its overnight rate at 2.25% in March, and another hold is widely expected at the end of April. Variable rates have been stable in 2026, but the outlook is not entirely clean with upward pressure from the Iran conflict, oil prices, and ongoing US - Canada trade uncertainty.

Fixed rates have been more volatile for those same reasons. Bond yields, which lenders use to price fixed mortgages, have been bouncing around. If global uncertainty settles, fixed rates should ease. If it escalates, they could go higher.

Here is how I think about it. A 3-year fixed gives you payment certainty for three years, and a chance to renew into potentially better conditions. A 5-year fixed is an insurance policy. You pay slightly more to guarantee your rate regardless of what happens in the world. That peace of mind has real value for a lot of people. Variable makes sense if your income is solid, your cash flow can handle fluctuation, and you are comfortable watching the Bank of Canada's moves without losing sleep over them.

There is no universally correct answer. But there is a correct answer for your situation. Know which one that is before you walk into the conversation.

We chose to go with variable. Although rates can go up, we were comfortable when our rate doubled in 2022-2023, and can handle another doubling. I hope this doesn't happen but if it does, we are ready for it. Another reason we opted for variable is the current rate difference, which sites at around 0.75% for all lenders we got offers from. Three rate increases are needed to get our variable rate on par with a fixed one right now.

How to actually get a better rate

The net effect of doing nothing

I have written about the importance of looking at the net effect before making financial decisions. Mortgage renewal is one of the clearest examples of where this matters.

The cost of doing nothing, i.e. signing the first offer, not shopping around, not negotiating, is not just the slightly higher rate. It is the compounding effect of that higher rate paid monthly for the next several years. It is the opportunity cost of money that could have gone into your TFSA or investment portfolio instead of the bank's pocket. And it is the habit of passive acceptance that tends to bleed into other financial decisions too.

For us, that net effect if we didn't shop around was going to be ~$10,200 over the next 5 years for a variable and as much as ~$19,800 for a fixed.

For anyone reading this outside Canada - the same logic applies wherever you are. Whether you are remortgaging in the UK, refinancing in the US, or renewing anywhere else, the principle is identical. Never accept the first number. Understand what you are signing. Run the math on the full term, not just the monthly payment.

One last thing

Nobody teaches you this stuff. Your bank is not going to walk you through how to negotiate against them. The system is set up so that passive people pay more and informed people pay less. It is not complicated - it just requires you to show up and ask.

Build the freedom before you need it.

Rate figures referenced from NerdWallet Canada, Ratehub.ca, Altrua Financial, Bank of Canada, and True North Mortgage (April 2026). Always verify current rates with a licensed mortgage professional before making decisions.