More than a million Canadian mortgages are expected to renew in 2026, and many belong to owners who locked in at very low rates in 2020 and 2021. For those borrowers, industry estimates point to payment increases of roughly 10% to 20%. If your bungalow’s mortgage is coming due, a few months of preparation can make a real difference to the rate you get and how comfortably you carry it.
Key takeaways
- Start four to five months before your renewal date.
- Do not sign the first renewal letter without comparing offers.
- Switching lenders at renewal is common and often costs little.
- Extending amortization lowers the payment but raises total interest.
- Bungalow owners have extra options, including a legal suite or downsizing within the same home type.
Why 2026 renewals feel different
Five-year fixed rates below 2% were common in late 2020 and 2021. Rates today are well above that, even after the Bank of Canada brought its policy rate down to 2.25%. The result is a higher payment for most people renewing a pandemic-era mortgage, even though they have paid down principal for five years.
The picture is not the same for everyone. Owners who took a variable rate or a short term when rates peaked in 2023 may actually see their payment fall.
Your renewal timeline
- 150 days out: Find your renewal date, current balance and remaining amortization. Check your credit report for errors.
- 120 days out: Ask your current lender for an early renewal offer. Speak with a mortgage broker to see what other lenders would offer. Most will hold a rate for up to 120 days.
- 90 days out: Compare offers on rate, term, prepayment privileges and penalties, not rate alone.
- 60 days out: Decide. If you are switching lenders, start the paperwork so it completes on your renewal date.
- 30 days out: Confirm everything in writing and adjust your budget for the new payment.
Ways to manage a higher payment
| Option | What it does | Watch out for |
|---|---|---|
| Switch lenders | May get a lower rate | Possible discharge and appraisal fees |
| Extend amortization | Lowers the monthly payment | More interest over the life of the loan |
| Shorter term | Keeps options open if rates fall | Renewal risk if rates rise instead |
| Lump-sum payment at renewal | Reduces the balance with no penalty | Leaves less in savings |
| Variable rate | Lower starting rate today | Payment can rise with the Bank of Canada |
Our guide to fixed vs variable mortgages covers the last row in detail, and how to choose a mortgage agent explains what to ask a broker.
Options that are specific to bungalow owners
- Add or legalize a basement suite. Bungalows have a large basement footprint, and many already have a side or rear entrance. Rental income can offset a higher payment, although the work takes time and permits.
- Tap equity carefully. Bungalows on wide lots often carry substantial land value. Refinancing to consolidate higher-interest debt can lower your total monthly outflow, but it increases the mortgage.
- Right-size. If the payment no longer fits, moving to a smaller bungalow or a different area can free up equity while keeping one-level living.
Bungalow tip: If you are thinking of selling within the next two or three years, choose a term and lender with a fair penalty and a portable mortgage. A cheap rate with a harsh penalty can cost more than it saves.
Frequently asked questions
Do I have to pass the stress test to switch lenders at renewal?
The rules were relaxed for straight switches of an existing mortgage with no new money, for both insured and uninsured borrowers. Lenders still assess your income and credit, so confirm with a broker.
What if I cannot afford the new payment?
Contact your lender early. Lenders have tools such as amortization extensions, and they prefer a plan to a missed payment.
Is it worth breaking my mortgage early to lock in?
Sometimes, but the penalty often outweighs the benefit. Ask for the exact penalty in writing and have a professional run the comparison.
Thinking about a move instead?
If renewal has you rethinking your home, see what your budget buys today. Browse bungalows for sale across Ontario or read our seller’s guide to understand the process.
This article is general information as of early October 2026, not legal, tax, mortgage or insurance advice. Rules and numbers change, so confirm the details for your situation with a licensed professional.
