Renewing your mortgage in 2025? Here's how you can save

Many Canadians will be facing mortgage renewals this year and while rates have come down slightly, for many the costs will still be much higher. So, how do you save money?

More than 1.2 million mortgages will come up for renewal in 2025, with many facing higher rates than when their term began, when the Bank of Canada rate was around 1 per cent.

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"The vast majority of them will have to renew at higher rates," said Francis Cortellino, a real estate economist with the Canada Mortgage and Housing Corporation.

Expect to pay more?

"Are we going to see some sticker shock? Sure you are, but it's not as bad as everybody makes it out to be," says Frank Napolitano, with Mortgage Brokers Ottawa. "I mean, there's options out there. Anybody who's owned a home for the last five years has probably seen their house appreciate tremendously over that period of time.

"Anybody that took out a mortgage five years ago, probably anywhere between 2.75 to 3 per cent, and now you're looking at probably anywhere between 4 and 4.5 per cent."

That means a $400,000 mortgage could cost you about $250 more per month after you renew than it did five years ago.

"Which again could affect some people, but they've got options," Napolitano said.

Napolitano said you could use your home's equity to extend your amortization period at renewal to lower payments if needed.

"Set up your mortgage payments that it fits in with your current lifestyle. And then, as interest rates come down a few years from now, you can readjust your amortization at that point."

What's the best strategy to save when renewing your mortgage?

If you're renewing, the best strategy is shopping around for the best deal.

"You know, a lot of people will drive three blocks to save a half a cent a liter on gas, but they won't do their homework when it comes to their mortgage," said Napolitano. "It's your biggest debt that you're ever going to carry. So why not get a second third opinion on your mortgage?"

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According to Ratehub.ca, the savings can be substantial.

"It would not be a stretch to say that you could save literally thousands of dollars over your mortgage term and then when you're stretching that out over an amortization horizon, it's literally in the tens of thousands of dollars," says Penelope Graham with Ratehub.ca. "Your existing bank is going to do everything in their power to make it easy for you to stick with them and they're really betting on that convenience that you're not going to look around for your other options, but it really is in your best interest to at least understand what options you do have out there."

Graham says knowing your options benefits you as a consumer.

"Even if you don't intend on switching to another lender, you can take that information and negotiate with your existing bank and perhaps have some additional leverage there to get a better, better rate."