AVOIDING “STICKER SHOCK” AT MORTGAGE RENEWAL

Many homeowners are used to renewing their mortgage at a LOWER payment than what they started with. But rising interest rates in Ontario mean that renewals can now bring an unexpected increase — creating a sudden feeling of financial “sticker shock.”

The good news? With preparation and strategy, this surprise can be avoided entirely.

1️⃣ Why mortgage renewal payments may increase

When rates rise between terms, your new payment can be higher even if your balance has decreased.

✔️ higher interest costs at renewal

✔️ payments adjusted upward

✔️ long gaps between rate drops

This impacts homeowners who previously renewed into consistently lower rates.

2️⃣ A real-world example of renewal sticker shock

A homeowner with a $350K mortgage at 2.24% paid about $1,522/month.

✔️ balance reduced over the term

✔️ renewal offered at 3.25%

✔️ payment jumps to $1,668/month

Even though the balance dropped, the interest increase pushes the monthly payment higher.

3️⃣ How small annual payment increases solve the problem

Increasing your mortgage payment slightly each year helps reduce renewal shock.

✔️ a 2% increase annually smooths future jumps

✔️ lowers principal faster

✔️ builds renewal resilience

This strategy shortens your amortization while protecting your budget.

4️⃣ Why annual mortgage reviews matter

A yearly check-in ensures you stay ahead of changes.

✔️ evaluate remaining balance

✔️ check prepayment options

✔️ adjust monthly payment

✔️ review current market conditions

Proactive planning avoids surprises at renewal and supports long-term financial stability.

💬 Final Thought

Rising rates don’t have to catch homeowners off guard. Regular payment adjustments and annual mortgage reviews help keep monthly costs predictable and manageable — while reducing interest and accelerating mortgage payoff.

If you want help planning ahead for your next renewal, The Frontline Mortgage Group is here to walk you through every step.