How the mortgage renewal calculator works
The live tool stays on the renewal calculator. This page is the math, the worked example, and the 180-day timeline behind it.
What the renewal calculator actually computes
A renewal is not a new mortgage. Your amortization keeps running; only the term ends. So the arithmetic starts from three quantities the calculator derives rather than asks you to guess: the balance at maturity (the original principal amortized forward at the expiring contract rate for the number of payments you have made), the remaining amortization (original amortization minus the elapsed term), and the renewal payment (the balance re-priced at the new rate over what is left).
Everything else on the page is a comparison against that baseline: what the payment becomes at a rate half a point either side, what a lump-sum prepayment at maturity removes from it, and what re-amortizing back to a longer schedule does to both the payment and the lifetime interest bill. Payments are computed with semi-annual compounding, the convention that governs Canadian fixed-rate mortgages.
Worked example: a 2021 five-year fixed maturing now
A borrower took a $560,000 mortgage at 2.19% on a five-year fixed term with a 25-year amortization. The monthly payment has been $2,423. Over the five years, $89,020 of principal came off and $56,359 went to interest, leaving a balance at maturity of $470,980 and 20 years of amortization remaining. Here is what that balance costs at three plausible renewal rates:
| Renewal rate | New monthly payment | Change vs $2,423 | Increase |
|---|---|---|---|
| 3.89% — 20 years remaining | $2,819 | +$396 | +16.3% |
| 4.29% — 20 years remaining | $2,917 | +$494 | +20.4% |
| 4.79% — 20 years remaining | $3,042 | +$619 | +25.5% |
| 4.29% — re-amortized to 25 years | $2,552 | +$129 | +5.3% |
The last row is the lever most borrowers do not know they have. Stretching the amortization back out to 25 years cuts the increase from $494 a month to $129 — but it also pushes five extra years of interest onto the loan, and because it is not a straight switch, it re-opens the stress test if you also want to change lenders. That trade is the whole renewal decision in one line.
Stay, switch, or refinance
| Path | Stress test | Typical cost | Best when |
|---|---|---|---|
| Sign the renewal letter | None | $0 | Never, without checking the offer against market first |
| Negotiate with the incumbent | None | $0 | You hold a competing commitment and want to avoid paperwork |
| Straight switch to a new lender | Exempt (uninsured, since Nov 2024) | $0–$400 | The rate gap beats the discharge and assignment fees |
| Refinance | Full MQR qualification | $1,000+ | You need equity out, debt consolidated, or a longer amortization |
The distinction that matters is the third row against the fourth. A straight switch keeps the loan amount, the amortization, and the payment schedule unchanged, and is exempt from re-qualifying at the Minimum Qualifying Rate. Change any one of those three and the transaction is a refinance, priced and underwritten accordingly. Borrowers routinely forfeit the exemption by asking to roll a few thousand dollars of closing costs into the new mortgage.
The renewal timeline
| Days before maturity | What to do |
|---|---|
| 180 | Pull your balance and maturity date from your statement. Model the renewal payment on the calculator so the number stops being a surprise. |
| 120 | Ask a broker or a competing lender for a rate hold. This is free optionality: it caps your rate while leaving you free to take a lower one. |
| 90 | Take the held rate back to your current lender in writing. A documented competing offer is the only leverage that reliably moves a posted renewal rate. |
| 45 | Decide. A straight switch needs roughly 30 days to fund; a collateral charge discharge needs longer. |
| 21 | Your renewal statement arrives. If this is the first time you have thought about it, you have already lost the negotiation. |
If you are breaking the term early
Renewing at maturity carries no penalty. Leaving before maturity does. On a closed fixed mortgage the penalty is the greater of three months’ interest or the Interest Rate Differential; on a variable mortgage it is normally three months’ interest alone. Using the example above, three months’ interest on a $470,980 balance at 2.19% is about $2,579 — but the IRD on a mortgage written at 2.19% with years still to run can be many multiples of that, because it compensates the lender for the spread between your rate and what it can earn today.
That asymmetry is why early renewal is often worth doing on a variable mortgage and rarely worth doing on a deeply discounted fixed one. Ask your lender for the penalty quote in writing and compare it against the interest saved over the remaining months, not against the headline rate gap.