What’s driving the sharp renewal increase forecast for 2026 and how homeowners can prepare.

A large wave of Canadian mortgages comes due through 2026. Bank of Canada staff estimate roughly 60% of outstanding mortgages will renew in 2025 and 2026. Five-year fixed borrowers who locked in during 2020 or 2021 face some of the biggest adjustments, with typical payment increases in the 15% to 20% range at renewal, depending on rate path and remaining amortization.

Why 2026 Bites

1. The renewal bulge: Pandemic-era originations are maturing together. Both the Bank of Canada and OSFI have flagged the concentration of renewals by the end of 2026 as a systemic risk that could stress borrower budgets and lender portfolios.

2. Rate reset math: Even if rates drift lower from their 2023 and 2024 peaks, many 2020 and 2021 mortgages will still renew at 1.5 to 2 percentage points higher than their original rate. According to Bank of Canada modeling, this equates to mid-teens to near-20% payment lifts for a large share of five-year fixed renewals.

3. Amortization catch-up: Variable-rate borrowers who kept payments static during 2022 to 2024 effectively extended their amortization. When those loans reset, amortization “catch-up” adds pressure even if headline rates fall.

4. Tighter oversight: Regulators are instructing lenders to monitor higher-risk renewals closely. The Financial Consumer Agency of Canada (FCAC) released updated guidance in 2025 requiring lenders to proactively contact borrowers facing hardship and offer payment relief options.

How to Estimate Your Own Jump

• Confirm your maturity date and balance. You can find this on your renewal letter or lender portal.
• Run a renewal quote with today’s rates plus a 0.5 to 1.0% buffer. That is a realistic “stress-tested” range.
• Review your amortization schedule. If your amortization grew due to variable-rate underpayment, expect your new payment to rise even more as it resets.
• Model your total housing costs. Include taxes, insurance, utilities, and maintenance, not just the mortgage payment.

Tactics to Blunt the Shock

1. Lock early. Most lenders offer 120-day rate holds. Securing one can protect you from pre-renewal spikes.

2. Adjust the amortization. Extending from 25 to 30 years can soften the monthly impact. Just ensure you have a plan to shorten it later.

3. Make pre-renewal payments. Even small lump sums reduce the balance that your renewal payment is calculated on.

4. Shop the market. Many lenders will offer no-fee switches to attract strong borrowers. Compare both fixed and variable offers.

5. Blend strategically. If rates drop before maturity, a blend and extend may offer stability without penalties.

6. Fix what you can predict. If volatility stresses you, choose a fixed term that balances rate and flexibility.

7. Build a cash buffer. Aim for three to six months of housing costs in savings or available credit.

8. Eliminate high-interest debt. Pay off credit cards or loans before renewal. It improves ratios and rate eligibility.

9. Know your hardship options. Lenders can temporarily adjust terms for borrowers in good standing. FCAC’s 2025 guideline ensures fair treatment and transparency.

What If Rates Drift Lower Before You Renew

If the Bank of Canada begins rate cuts before your renewal window, it may ease some pressure, but do not count on a full rollback to pandemic-era levels. Remember, payment savings only lock in when you actually renew, not when you see headlines.

Hold your rate, monitor the bond market, and re-price before closing if yields move in your favor.

A Quick Case Study

Original mortgage: $500,000, five-year fixed from late 2021 (25-year amortization) Renewal in 2026: Approximately $425,000 balance

• Scenario A: Renew at a rate 1.75% higher than the original. Payment jump of about 18%.
• Scenario B: Extend to 30 years, prepay $10,000 before renewal, then add $150 monthly once renewed. This trims the payment shock to under 10% and preserves long-term flexibility.

Broker Checklist Before You Sign

• Get written quotes from multiple lenders.
• Compare effective rates after cash-back or switching costs.
• Review penalty and portability clauses.
• Confirm prepayment flexibility and amortization options.
• Have updated income documentation ready for any refinance.

Bottom Line

Payment shock is coming, but it does not have to be devastating. With early preparation, accurate modeling, and a few tactical adjustments, most homeowners can absorb the 2026 renewal wave without major financial disruption.

The key is acting early, not waiting for renewal notices to arrive in the mail. A proactive broker or financial advisor can model your options now and save you thousands later.

Written by the team at BBM

For many Albertans heading into retirement, the family home isn’t just where memories were made — it’s also where a big chunk of their wealth is sitting. Your home is likely your biggest asset, and while it offers stability, it can also tie up your money in space you might not really need anymore.

That’s where smart-sizing comes in.

Unlike the old-school idea of “downsizing,” smart-sizing isn’t about giving things up — it’s about adjusting your living situation so it fits your life now: your lifestyle, your goals, and your future plans.

Unlocking Your Home’s Equity

When you sell your larger home and move into something smaller or more efficient, you unlock the equity you’ve built over the years. That money can go toward investments, retirement savings, paying off debt, or even just giving yourself more flexibility and peace of mind.

For many retirees, this is one of the best ways to supplement income without relying fully on pensions or government benefits.

Lower Costs, Less Stress

A smaller home typically means lower utility bills, less maintenance, and lower property taxes — all of which can add up over time. Even if you choose a more desirable area or newer build, the efficiency and reduced upkeep usually mean you’ll still come out ahead financially.

Living Better, Not Smaller

Retirement should be about freedom — not more rooms to clean or lawns to mow. Smart-sizing often means moving closer to the things that matter most: family, healthcare, amenities, or simply a community that fits your pace. You trade square footage for convenience, connection, and comfort.

A Quick Example

Let’s say a couple sells their suburban home for $800,000 and buys a $550,000 condo closer to the city. They free up $250,000 in equity, and their annual maintenance and utility costs drop by around $6,000.

Over 10 years, that’s hundreds of thousands of dollars that can go toward travel, health, or just enjoying a worry-free retirement.

Before You Make the Move

Smart-sizing takes planning. Ask yourself:

How much equity will I actually unlock after selling and buying?

Will this new home truly reduce my ongoing costs?

Does the location fit the lifestyle I want for retirement?

What’s my plan for reinvesting the extra equity?

The Bottom Line

Smart-sizing isn’t about living with less — it’s about living better with what you have. When you align your home with your goals, you can free up equity, reduce stress, and make retirement more comfortable and financially secure.

Written by the marketing team at Breaking Banks

For most Canadians, the path to wealth has long been tied to saving and investing for the future. But waiting decades to enjoy the fruits of your labour doesn’t appeal to everyone, especially if you’re focused on building a life with more freedom today. That’s where cash flow strategies come into play.

A growing number of Canadians are shifting their focus from long-term capital appreciation to monthly income that covers expenses and creates lifestyle flexibility. Passive income focuses on creating steady, reliable cash streams that flow into your account each month with minimal effort. The goal is to build a foundation of financial stability, like having your own private pension.

Here’s how to design a monthly wealth engine using three proven income streams: dividends, REITs, and rental property cash flow.

1. Dividend Income: The Classic Foundation

Dividend-paying stocks have been a staple of income investing for decades. These are companies, often in sectors like utilities, banks, telecom, and pipelines, that distribute part of their profits to shareholders.

Investing in blue-chip Canadian dividend stocks offers two key benefits: income and stability. Many of these companies have long histories of increasing dividends over time. That means your monthly or quarterly income can grow, even if you’re not adding more capital.

To build consistent dividend income:

• Focus on Dividend Aristocrats. Companies that have increased their dividends annually for at least five years.
• Diversify across sectors to reduce risk.
• Use a non-registered account if you’re in a lower tax bracket to take advantage of the dividend tax credit.

Set a target. For example, a portfolio yielding 5% annually requires $240,000 invested to generate $1,000 per month.

2. REITs: Real Estate Income Without the Hassle

Real Estate Investment Trusts (REITs) let you invest in commercial and residential real estate without owning property directly. These publicly traded trusts hold portfolios of office buildings, apartments, malls, or industrial spaces and pay out most of their rental income to investors.

The key advantage of REITs is accessibility. You can invest with a few hundred dollars, spread across multiple properties and geographies. Many REITs pay distributions monthly, making them ideal for building a passive income stream.

To boost reliability:

• Look for REITs with a strong track record of distribution stability.
• Focus on sectors with long-term demand, like residential or industrial real estate.
• Hold REITs in a TFSA or RRSP to shelter distributions from tax.

3. Rental Property Cash Flow: The Income Workhorse

Owning rental property is a hands-on way to generate passive income. While it requires more upfront effort and management, it can produce steady cash flow, appreciation, and tax benefits.

Cash flow is the income left over after all expenses are paid (mortgage, taxes, insurance, maintenance, and property management). Positive cash flow means your tenants are covering your costs and then some.

For a rental property to become part of your monthly wealth engine, structure it with intention:

• Prioritize cash flow over speculation. The numbers must work from day one.
• Use fixed-rate financing to lock in predictable costs.
• Consider secondary suites or multi-unit properties to maximize rental income.

Done right, a single property can generate several hundred dollars a month, with long-term equity growth on top.

4. MICs: Real Estate Income Without Owning Property

If you like the idea of earning real estate income but don’t want the responsibilities of being a landlord (or even owning property), Mortgage Investment Corporations (MICs) offer a compelling alternative.

A MIC pools investor capital to lend money secured by real estate. In other words, you’re investing in the lending side of real estate, not the ownership side. These mortgages are typically short-term, higher-yield loans made to borrowers who may not qualify through traditional banks.

MICs generate income through the interest charged on those mortgages. In Canada, they are required to distribute most of that interest income back to investors, often on a monthly or quarterly basis.

To use MICs effectively:

• Research the quality of the lending portfolio and the manager’s track record.
• Consider diversification across multiple MICs to spread risk.
• Use registered accounts like a TFSA or RRSP to defer or avoid tax on distributions.

MICs offer higher yields than traditional fixed-income investments, but come with risk, especially in housing downturns or if underwriting standards are weak. Stick to well-established firms with transparent reporting.

Putting It All Together: A Balanced Approach

No single income stream does it all. The real magic comes from blending them.

Imagine this scenario:

• $300/month from dividend stocks
• $400/month from REITs
• $1,000/month from rental cash flow
• $500/month from MICs

That’s $2,200 each month, without touching your original capital. Over time, that income can grow, especially if reinvested and optimized for tax efficiency.

Final Thought

Passive income doesn’t mean no effort. But, it does mean front-loading the effort to create lasting freedom. Whether you’re looking to reduce work hours, travel more, or simply stop worrying about every bill, building a monthly wealth engine through cash flow gives you more control, earlier in life.

Start small, stay consistent, and focus on income that arrives whether you’re working or not. Because when your money starts working harder than you do, you’re building wealth on your terms.

Written by the marketing team at Breaking Bank

You found a better rate. Maybe you’re moving. Or consolidating debt. On the surface, breaking your mortgage might look like a smart move. But before you pull the trigger, take a closer look at the penalty. In many cases, it can eat up most of the savings or potentially worse.

This guide explains how prepayment penalties work, why they differ between lenders, and how to know whether refinancing early is actually worth it.

What Is a Prepayment Penalty?

A prepayment penalty is the cost your lender charges if you end your mortgage term early. It’s their way of recovering lost interest.

In Canada, the penalty is usually whichever is higher:

1. Three months’ interest
2. The Interest Rate Differential (IRD)

If you have a variable-rate mortgage, you’ll typically be charged three months of interest. If you have a fixed-rate mortgage, lenders often apply the IRD, which is usually higher.

How Three Months’ Interest Works

This is the simpler of the two. You multiply your mortgage balance by your interest rate, divide by 12, and then multiply by 3.

Example:

• Mortgage balance: $400,000
• Interest rate: 4.50%

($400,000 × 4.50%) ÷ 12 × 3 = $4,500 penalty

This formula applies to most variable-rate mortgages and some fixed-rate mortgages if the IRD ends up lower.

Understanding the Interest Rate Differential (IRD)

The IRD is the more complex and potentially more expensive penalty.

There are variations to how individual lenders calculate IRD. Here’s a simple example to illustrate the concept:The IRD formula measures how much more interest you’re paying compared to what the lender could earn by lending that money today. The larger the difference between your current rate and today’s posted rate for the remaining term, the bigger the penalty.

Example:

• Balance: $400,000
• Fixed rate: 4.80%
• Time left: 2 years
• Lender’s current 2-year posted rate: 3.00%

(4.80% – 3.00%) × 2 years × $400,000 = $14,400 penalty

That’s more than triple the cost of the three-month interest formula.

Why Penalties Vary So Much

The biggest reason for the variation is how lenders calculate IRD. Some banks use their inflated posted rates in the formula, which increases the penalty. Others, like many monoline lenders (non-bank lenders who work with mortgage brokers), use discounted rates that better reflect the market.

As a result, two homeowners with similar mortgages can face very different costs, depending on which lender they chose.

When Breaking Your Mortgage Makes Sense

Let’s say you want to refinance to a lower rate. Here’s how to do the math.

Scenario:

• Balance: $400,000
• Current rate: 4.80%
• Remaining term: 3 years
• Available new rate: 3.50%
• Penalty: $12,000
• Interest savings at new rate: $16,200 over 3 years

In this case, you come out ahead by $4,200 after covering the penalty.

But if the numbers were reversed…say the penalty was $16,200 and the savings only $12,000, you’d be locking in a loss.

How to Lower the Penalty or Avoid It

There are ways to reduce the impact of a prepayment charge:

Ask for details upfront Before signing a mortgage, ask how the lender calculates penalties. Make sure you understand the math.

Choose lenders carefully Monoline lenders often use fairer IRD formulas than the big banks.

Consider variable rates They usually come with smaller penalties, just three months’ interest.

Explore blend-and-extend options Some lenders will let you blend your current rate with a new one and avoid breaking the mortgage entirely.

Use your porting option If you’re moving homes, some lenders allow you to transfer your mortgage to a new property without a penalty.

Time your break strategically As your maturity date gets closer, the IRD penalty often shrinks. Waiting a few months can make a big difference.

The Bottom Line

A lower rate or better opportunity can be tempting. But breaking your mortgage isn’t always a financial win. The penalty can erase much of the benefit if you’re not careful.

Before making a decision, calculate both the penalty and the long-term savings. If you’re not sure, work with a mortgage broker who can run the numbers and help you choose the best path forward.

By the team at Breaking Bank

There’s no shortage of mortgage advice out there. From online forums to coffee shop conversations, everyone seems to have an opinion. Some of it’s helpful. A lot of it? Not so much.

The truth is, the mortgage world has changed—especially in Canada. Rules, products, and opportunities evolve, but a lot of the advice being passed around hasn’t kept up.

So let’s slow it down and clear up five of the most common myths heard from homeowners and buyers alike—because sometimes, knowing what’s not true can be just as powerful as knowing what is.

Myth #1: You Need 20% Down to Buy a Home

This one stops a lot of buyers before they even get started.

Yes, putting 20% down eliminates the need for mortgage default insurance, but it’s not a requirement—especially for first-time buyers. In Canada, if the home is under $500,000, you can get in with just 5% down. For homes between $500,000 and $1,499,999, the minimum down payment is tiered: 5% on the first $500K, and 10% on the remainder.

The result? You don’t need to hit that 20% mark to make homeownership a reality. And while you will pay mortgage insurance with less than 20% down, it’s often a worthwhile trade-off if it means entering the market sooner or keeping cash on hand for emergencies, renovations, or investments.

Myth #2: Your Bank Is the Best Place to Get a Mortgage

It might feel easier to “just go with your bank,” especially if that’s who you’ve always dealt with. But here’s the thing: your bank can only offer their rates, terms, and products. That’s it.

A mortgage broker isn’t tied to one institution. They work with multiple lenders—including banks, credit unions, and independent mortgage companies—to find the product that fits your specific goals and circumstances. That matters a lot if you’re self-employed, have less-than-perfect credit, or just want a better deal.

More options = more negotiating power, better structure, and a greater chance of finding a mortgage that actually aligns with your life.

Myth #3: The Lowest Rate Is Always the Best Deal

We’ve all seen the ads. “Lowest mortgage rate in Canada!” Sounds great—until you read the fine print.

Some of the lowest-rate mortgages out there come with significant limitations: strict penalties if you break the term early, zero prepayment privileges, or clauses that make it difficult to move or refinance. And in real life, those things matter.

What if you need to break your mortgage to access equity? Or sell unexpectedly? Or refinance to consolidate debt?

The best mortgage isn’t just about the rate—it’s about flexibility, protection, and long-term cost. A slightly higher rate on a mortgage that fits your life could save you far more in the end than a “no-frills” option with hidden landmines.

Myth #4: You Have to Wait Until Your Term Is Up to Refinance

Many people think they’re locked in until their term ends. That’s not true.

You can refinance a mortgage before the term is over. Yes, there may be a penalty—but in some cases, it’s more than worth it. For example, if you’re carrying high-interest debt, funding a major renovation, or need to tap into your home equity for a business or investment, the potential savings or returns may easily outweigh the cost of breaking the mortgage.

The key is running the numbers. A good mortgage advisor will help you calculate whether it makes sense now—or if it’s better to wait.

Myth #5: Renewing with Your Current Lender Is the Easiest—and Smartest—Move

When your mortgage comes up for renewal, it’s tempting to take the path of least resistance. Your current lender sends a renewal notice, and all you have to do is sign.

But here’s what many people don’t realize: lenders often reserve their best rates and promotions for new customers, not existing ones. In fact, renewing without shopping around could mean paying more than you need to—sometimes for the next five years.

Renewal time is a golden opportunity to review your situation, compare options, and even adjust your mortgage strategy. You’ve got leverage, and you should use it.

The Bottom Line

There’s a lot of noise out there. And while mortgage advice might be well-intentioned, it’s not always accurate—or right for your situation.

Getting clarity means asking better questions, exploring your options, and working with someone who looks beyond just rate. Whether you’re buying your first home, refinancing to unlock equity, or preparing for renewal, having the right information (and the right support) can make a huge difference in your financial future.

Because in the mortgage world, the right strategy is worth more than the right guess.

Written by the team at Breaking Bank