Roughly 1.2 million Canadian mortgages are up for renewal in 2025, according to the Canada Mortgage and Housing Corporation's Residential Mortgage Industry Report.
Eighty-five per cent of these mortgages were opened when the Bank of Canada's (BoC) key lending rate was at or below 1%.
As many Canadians are preparing to renew their mortgages in a higher rate environment, data from a new TD survey found that more than a quarter of respondents — 27% — said they don't have a strong understanding of mortgage affordability or how to make their mortgage more affordable.
TD Stories sat down with Gino Caputo, Senior Vice President, Real Estate Secured Lending at TD, to get his advice on what Canadian mortgage holders should be thinking about if their mortgages are up for renewal this year.
Here are four questions he said homeowners should be asking themselves to help them conduct their own risk assessment about renewing their mortgage in 2025.
Is a fixed or variable rate mortgage better for my personal financial situation?
A closer look at your financial situation and any changes to your income can help you determine which type of interest rate is best for you ahead of renewal.
Changes to your financial situation might include a job loss, a promotion, or new debt, Caputo said. A homeowner might also be planning a vehicle purchase.
"It really comes down to the amount of flexibility in your debt service ability," Caputo said.
Debt service ability means how well a homeowner can manage their total monthly debt payments, including car loans, credit cards, student loans, and mortgages.
If a homeowner is carrying a lot of debt or their income is inconsistent, they might choose a fixed rate mortgage instead of a variable rate, Caputo said. With a fixed rate mortgage, the interest rate will not change throughout the term of the mortgage, and neither will the payments.
But if a homeowner has increased their income and has access to more cash, they might be open to choosing a variable rate mortgage and managing higher monthly payments or a longer amortization period if interest rates go up in the future, Caputo said.
The rate on a variable rate mortgage is calculated based on the Bank of Canada’s lending prime rate, which can fluctuate over the course of a mortgage term.
Am I interested in a mortgage renewal or a refinance?
Renewing a mortgage isn't the only option. If a homeowner is looking to access more funds from the equity in their home, or is thinking about consolidating their debts, they might choose to refinance their mortgage instead of renewing it.
They might also want to refinance because they are thinking about using the additional funds to renovate their home or maybe purchase an investment property, Caputo said.
They could also be planning to sell the home soon, which could mean choosing a shorter term and an open mortgage.
"If a homeowner is planning to sell in the next year, the homeowner will want flexibility with their mortgage products," he said.
"A mortgage professional can help homeowners understand their risks and choose the right option for them."
How long should I wait to renew in case interest rates change?
Even though no one can confidently predict the future, Canadians surveyed had their own opinions about rising and falling interest rates.
A third of survey respondents said they believe interest rates will increase in the next year, while 27% believe they will decrease. Twenty-nine per cent of respondents think interest rates will stay the same.
"Everyone got comfortable that rates would be low forever, and no one thought rates would go up as much as they did," Caputo said.
"We have seen rates on a downward slope, though, so some customers are waiting until the last week of their renewals to see if rates go down more."
All that said, there can be value in locking in your rate early for the customers renewing into a lower interest environment. Many lenders let you lock in a fixed mortgage interest rate 120 days before renewal, which might offer some peace of mind for homeowners. If rates increase in the meantime, homeowners will have already signed a lower rate.
When should I ask for advice on my mortgage renewal?
Thirty-seven per cent of survey respondents said that having easier access to trusted advice would have caused them to make different mortgage decisions, the TD survey found.
To access trusted advice about mortgage costs, be proactive, start early, and don't leave the process until the last minute, Caputo said.
While you can usually renew your mortgage as late as 120 days before maturity without you having to pay a prepayment charge, it’s a good idea to reach out to your bank or other lenders six months in advance to initiate the discussion, take stock of your personal circumstances, and help inform your decision-making, he said.
"Don't wait until the last minute, as you'll want to give yourself some time to have a conversation with a mortgage professional and review your options based on your current and anticipated future financial situation," Caputo said.
"Even if it's a straightforward renewal, you'll still want to consider the current rates and term structure."
About the TD survey