Mortgage Renewal Payment Shock Calculator Canada 2026 – Estimate Your New Payment

A mortgage renewal payment shock calculator estimates your new monthly mortgage payment when renewing at current 2026 interest rates, helping you prepare for payment increases and assess affordability. Over 1.2 million Canadian mortgages renew in 2026, many at rates 2-4 percentage points higher than pandemic-era originals. If you locked in at 2.5% in 2020-2021, renewing at 5.5% can increase payments by $500-$1,000 monthly on a $400,000-$500,000 mortgage. The Bank of Canada held rates at 2.25% policy (4.45% prime) in January 2026, with renewal rates around 4.5-5.5% depending on term and lender.

How to Use This Calculator

Enter your current mortgage balance (principal remaining), your current interest rate, remaining amortization in years, and your expected renewal rate. Use 4.5-5.5% for February 2026 market rates if you’re unsure of your specific renewal offer. The calculator compares your current monthly payment to your new payment at renewal.

Results show your current monthly payment, new monthly payment at renewal rate, monthly payment shock (dollar increase), percentage increase, and annual cost increase. You’ll see whether payment shock is manageable (under $300/month), concerning ($300-$700/month), or severe (over $700/month requiring immediate action).

The calculator assumes standard renewal at your remaining amortization. If extending amortization to 30 years (subject to lender approval and CMHC rules), use the extended amortization field to see how lengthening your repayment period reduces monthly payments at the cost of more total interest paid.

Who This Is For

Use this calculator if your mortgage renews in 2026 and you locked in at pandemic-era rates (2020-2022) below 3%. Calculate expected payment increases to adjust your budget, assess affordability, and plan debt reduction strategies before renewal.

This calculator is essential if you’re concerned about affording renewal at current rates 2-4% higher than your original mortgage. Identify payment shock scenarios early (6-12 months before renewal) to take corrective action: pay down other debts, build emergency savings, or explore debt relief options.

You should also use this calculator if you’re considering consumer proposals or bankruptcy to free up cash flow for higher mortgage payments. Calculate whether eliminating credit card and loan payments ($500-$1,500 monthly) would fully offset mortgage payment shock, allowing you to afford renewal and keep your home.

Understanding Mortgage Renewal Payment Shock

Payment shock is the increase in your monthly mortgage payment when you renew at a higher interest rate than your original term. Unlike variable-rate mortgages where payments adjust gradually throughout the term, fixed-rate renewals experience sudden payment jumps on renewal day.

Approximately 60% of outstanding Canadian mortgages will renew in 2025-2026, with the Bank of Canada estimating typical payment increases of 15-20% for five-year fixed borrowers who locked in during 2020-2021. Current Bank of Canada policy rate is 2.25% (held January 28, 2026) with prime rate at 4.45%, translating to fixed mortgage renewal rates around 4.5-5.5% depending on term and lender competition.

Pandemic-era rates of 1.5-2.5% (2020-2021) are being replaced with renewal rates of 4.5-5.5%, representing a 2.0-4.0 percentage point increase. This is one of the largest rate increases Canadian homeowners have faced at renewal since the early 1990s. Canadian home prices increased 30-50% in many markets from 2020-2022, meaning borrowers have large principal balances renewing at significantly higher rates.

Payment Shock Examples and Scenarios

A $500,000 mortgage with 20 years remaining at 2.5% has a current monthly payment of $2,650. Renewing at 4.5% increases the payment to $3,150 (monthly shock of $500 or 19% increase). Renewing at 5.5% increases the payment to $3,425 (monthly shock of $775 or 29% increase).

A $450,000 mortgage with 22 years remaining at 2.49% has a current monthly payment of $1,958. Renewing at 5.49% increases the payment to $2,845, creating a monthly shock of $887 (45% increase). This scenario represents one of the most severe payment shocks—borrowers who locked in at the lowest pandemic rates with large balances and moderate remaining amortization face payments increasing by nearly half.

Extending amortization reduces payment shock but costs significantly more in total interest. A $400,000 mortgage at 2.5% with 20 years remaining has a current payment of $2,120. Renewing at 5.5% with 20-year amortization increases the payment to $2,740 (shock of $620 or 29%). Renewing at 5.5% but extending to 30-year amortization increases the payment to only $2,271 (shock of $151 or 7%), saving $469 monthly. The trade-off is paying an additional $100,000+ in interest over the life of the mortgage.

Lump-sum prepayments before renewal reduce both principal and payment shock. A $500,000 mortgage renewing from 2.5% to 5.5% with 20 years remaining normally increases to $3,425/month (shock of $775). Making a $10,000 prepayment before renewal reduces the balance to $490,000 and the new payment to $3,357/month (shock of $707), saving $68 monthly or $816 annually.

Current Bank of Canada Rates and Renewal Market

The Bank of Canada held its overnight policy rate at 2.25% on January 28, 2026, maintaining the rate from its previous meeting. The Bank expects modest economic growth of 1.1% in 2026 and 1.5% in 2027, with inflation remaining close to the 2% target. Key factors include uncertainty around US trade policy and potential tariffs, weak GDP, stable unemployment, and core inflation in the high 2% range.

Current prime rate is 4.45% based on the BoC policy rate. Fixed renewal rates in February 2026 range from 4.5-5.5% for five-year terms, 4.7-5.2% for three-year terms, 4.8-5.3% for two-year terms, and 5.0-5.5% for one-year terms. Variable renewal rates range from 3.95-4.95% (prime minus 0.5% to prime plus 0.5%). Variable rates are currently lower than fixed but carry risk of increases if the BoC raises the policy rate.

Your renewal rate depends on lender cost of funds, competitive pressure, and your negotiation. Your lender typically sends a renewal offer 30-120 days before renewal with a rate that is not their best rate. Shop your renewal with at least 2-3 lenders or use a mortgage broker. As of November 2024, straight switches (moving your mortgage to a new lender without refinancing or increasing balance) no longer require stress testing, making it easier to shop for better rates without requalification barriers. Average savings from shopping versus accepting the first renewal offer: 0.3-0.8% on your rate, translating to $100-$300/month savings on a $400,000-$500,000 mortgage.

Mortgage Extension via Consumer Proposal

Consumer proposals eliminate 60-80% of unsecured debt (credit cards, personal loans, lines of credit, payday loans) through fixed monthly payments over 3-5 years. By reducing or eliminating non-mortgage debt payments, proposals free up $500-$1,500 monthly cash flow to absorb mortgage payment shock.

If your current mortgage payment is $2,000 at 2.5% and renewal at 5.5% increases it to $2,850 (shock of $850), but you currently pay $1,200/month on unsecured debts, filing a consumer proposal can reduce those payments to $350/month. This creates net cash flow improvement of $850/month ($1,200 minus $350), fully offsetting mortgage shock.

Strategic timing of consumer proposal filing is critical if your mortgage renews within 60-90 days. Complete mortgage renewal with your current lender first (no requalification required), then file consumer proposal immediately after renewal to eliminate other debts. Alternatively, if renewal is several months away, file immediately to stop collection pressure, wage garnishment, and lawsuits. Most lenders automatically renew existing mortgages even if you’re in a consumer proposal, though switching lenders becomes difficult.

Straight renewal with your current lender is almost always approved without issues while in a consumer proposal. Most Canadian lenders automatically renew existing mortgages at prevailing rates regardless of consumer proposal status, as long as you’ve maintained regular mortgage payments. Switching to a new lender for better rates is very difficult while in an active proposal—new lenders treat proposals (R7 credit rating) as significant credit risk and typically decline applications. Three years after completing your consumer proposal, the R7 rating is removed from your credit report and you can shop for competitive rates.

What to Do If You Can’t Afford Your Renewal

If payment shock is under $300/month, treat this as a budget adjustment requiring spending cuts rather than structural debt relief. Identify $300 in monthly discretionary spending to redirect to your mortgage. Build an emergency fund of three months’ worth of the new payment amount before renewal. Shop your renewal with 2-3 lenders or a mortgage broker—savings of 0.3-0.8% on your rate can reduce or eliminate payment shock entirely.

If payment shock is $300-$700/month, free up cash flow through debt elimination. Pay off small debts under $5,000 using tax refunds, bonuses, or asset sales. Consolidate high-interest debts into lower-rate loans if your credit score exceeds 650 to reduce monthly payments 20-40%. File a consumer proposal if you owe $15,000-$50,000 unsecured debt with no realistic path to pay off before renewal. Request 30-year amortization at renewal to reduce payment shock, though this costs significant additional interest.

If payment shock exceeds $700/month, urgent action is required. This level of increase ($8,400 annually) is equivalent to a 15-20% reduction in take-home income. File a consumer proposal to eliminate 60-80% of unsecured debt immediately, reducing monthly non-mortgage debt payments by $800-$1,500 and fully offsetting mortgage shock while providing legal protection from creditors. If you have home equity, sell before falling behind on payments and purchase a less expensive property or rent temporarily to preserve credit and equity. Use the DTI calculator to determine if your total debt service exceeds 44% after renewal, or read about the 2026 mortgage renewal crisis affecting 1.2 million Canadians.

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Use the Mortgage Renewal Payment Shock Calculator now to estimate your new payment at 2026 renewal rates. Enter your current mortgage balance, current rate, remaining amortization, and expected renewal rate (4.5-5.5%) for instant results. If payment shock is unaffordable, use the Consumer Proposal Calculator to see how eliminating 60-80% of other debts can free up cash flow to afford your renewal and keep your home.