# How does the blend-and-extend strategy mitigate 2026 payment shock?

> A blend-and-extend strategy lets you combine your current mortgage rate with a new, higher market rate to create a blended rate. This can help smooth out the jump in payments expected at renewal in 2026 by spreading the increase over a longer term.

Category: Renewal
Last verified: 2026-04-14
Source: https://ratellow.com/faqs/renewal/how-does-the-blend-and-extend-strategy-mitigate-2026-payment-shock

## Answer
### How blend-and-extend works

| Rate Scenario                 | Rate (%) |
|------------------------------|----------|
| Pandemic Rate (original)      | 2.50     |
| Market Rate (2026)            | 4.25     |
| Blended Rate (Simple Average) | 3.38     |

By blending your existing lower rate with today's higher rate and extending your term, you avoid a sudden payment spike when your mortgage renews at a much higher rate. Instead, your payments increase gradually, making the transition more manageable. This strategy is especially useful if you're concerned about "payment shock" when ultra-low pandemic rates expire in 2026.

*Note: The actual blended rate may vary depending on your lender's formula and the time remaining on your current term. The table above uses a simple average for illustration.*

## Related guide
- https://ratellow.com/guides/blend-and-extend-strategy

## Sources
- How will mortgage payments change at renewal? — https://www.bankofcanada.ca/2025/07/staff-analytical-note-2025-21/#The-results
- Clarifying OSFI's guidance on rental income — https://www.osfi-bsif.gc.ca/en/risks/real-estate-secured-lending/clarifying-osfis-guidance-rental-income-mortgage-classification