Mortgage Renewal Calculator
Renewing at a higher rate? See your new payment, the monthly increase, and what the new rate costs you in interest over your next term — calculated with the semi-annual compounding Canadian lenders actually use.
How this calculator works
Fixed-rate mortgages in Canada are required by the Interest Act to compound semi-annually, not in advance. That means the rate your lender quotes — say 4.79% — is first converted into an effective monthly rate before your payment is calculated:
i = (1 + r ⁄ 2)1⁄6 − 1 → payment M = P · i ⁄ (1 − (1 + i)−n)
where r is the quoted annual rate, P is your balance at renewal, and n is the number of payments left in your amortization. Many online calculators — especially American ones — assume monthly compounding and quietly overstate Canadian payments. This tool uses the exact Canadian convention, so the result should match your lender's renewal offer to within a dollar or two.
The interest comparison holds your remaining amortization constant and asks one question: over the term you select, how much more interest does the new rate cost than the old one would have? That number — not the sticker rate — is the real price of renewing today.
Worked example: the 2021 → 2026 renewal cliff
A homeowner who bought in 2021 with a 5-year fixed at 2.19% now renews $450,000 with 20 years of amortization left, at 4.79%:
| Line | | Amount |
|---|
| Old monthly payment | 2.19%, 20 yr remaining | ≈ $2,315 |
| New monthly payment | 4.79%, same amortization | ≈ $2,906 |
| Payment shock | per month | + $591 (+25.5%) |
| Extra interest over the 5-year term | vs. old rate continuing | ≈ $54,000 |
The monthly increase gets the attention, but the term-interest line is the number that should drive decisions — it is what shopping an extra 0.2% off your renewal rate, or making a lump-sum prepayment before renewal, actually saves you.
Renewal questions, answered
Why did my payment go up so much at renewal?
Most homeowners renewing in 2025–2026 locked in historically low rates (often 1.5%–2.5%) in 2020–2021. Because interest is charged on your full remaining balance, even a 2-point rate increase can raise a payment 20–40% — commonly called payment shock.
How are Canadian mortgage payments calculated?
Fixed-rate mortgages in Canada compound semi-annually by law. The quoted rate is converted to an effective monthly rate with i = (1 + r/2)^(1/6) − 1, then the standard amortization formula applies. US-style calculators that assume monthly compounding overstate Canadian payments slightly.
Can I extend my amortization at renewal to lower the payment?
Sometimes. With your existing lender this usually means refinancing and requalifying, though some lenders offer limited re-amortization at renewal. Extending lowers the payment but increases lifetime interest — model it by increasing the remaining-amortization input above.
Do I have to pass the stress test again when I renew?
Renewing with your current lender requires no requalification. Since late 2023, straight switches of uninsured mortgages to a new lender at renewal (same amount, same amortization) also skip the stress test. Refinances still require full qualification.
Is there a penalty for switching lenders at renewal?
No prepayment penalty applies on your renewal date, because your term has ended. Expect administrative costs — discharge, transfer, appraisal — though new lenders often cover some of these to win your business.
Does this work for variable-rate mortgages?
As an estimate, yes. Variable-rate mortgages typically compound monthly rather than semi-annually, so the true payment differs slightly. For fixed-to-fixed renewals — the most common case — the math here is exact.