If you purchased a home in Toronto or Brampton during the 2021 pandemic peak, you’re likely sitting on a mortgage rate between 1.3% and 1.7%. While those rates felt like a dream, the reality of 2026 is waking many homeowners up to a significant “payment shock.”
According to recent industry data, over 1 million Canadians are facing mortgage renewals this year. With the Bank of Canada holding the target interest rate at 2.25% and 5-year fixed rates averaging around 4.40%, the jump in monthly obligations can be staggering.
At Done Mortgage, we don’t want you to just survive your renewal—we want you to master it. Here is your 3-step audit and recovery plan to protect your home and your wallet.
1. The “Payment Shock” Audit: Know Your Numbers
The biggest mistake GTA homeowners make is waiting for the bank’s renewal letter to arrive in the mail. By then, your negotiating power is gone.
- Audit Your Credit Score: Ideally, you want an Equifax credit score
of at least 660 to access the most competitive rates. Before committing to a renewal, it is vital to compare fixed vs variable mortgage
options for 2026. - Calculate the Gap: Moving from a 1.5% rate to a 4.4% rate on a $600,000 mortgage could increase your payment by hundreds of dollars every month. Knowing this “gap number” now allows you to adjust your lifestyle or investment portfolio before the first new payment is due.
2. The “Blend and Extend” Recovery Strategy
If the thought of a 4.4% rate is overwhelming, you may have options beyond a standard renewal.
- Stabilize Your Income: Mortgage providers are looking for stability. Avoid major career changes or large new debts (like a car loan) in the six months leading up to your renewal.
- The Blend and Extend: We can often work with lenders to “blend” your current low rate with the new market rate. This averages out the cost and extends your term, providing a “middle-ground” rate that is much easier on your monthly cash flow than a total reset to current market peaks.
3. Leverage the GTA Market Shift
While rates have risen, the market balance is shifting in your favor. In January 2026, home prices in Toronto fell by an average of $7,100, and the market is teetering on the edge of a “buyers’ market” with a sales-to-new-listings ratio of 45%.
- Increase Your Down Payment: If you have savings or an inheritance, putting a lump sum toward your principal at renewal time reduces the total amount you need to borrow, which can drastically lower your interest costs.
- Shop Around: Don’t just sign your current bank’s renewal offer. Using a licensed mortgage broker allows you to compare the Big Five banks against smaller lenders who may be hungrier for your business in this cautious market.
2026 Mortgage Renewal FAQs
How much will my mortgage payments increase in 2026?
This depends on your original rate. If you are moving from a 1.5% pandemic rate to a current average of 4.40%, you could see a payment increase of approximately 20-25%.
What is the minimum credit score I need for a good mortgage rate in Canada?
While you can get approved with lower scores, a score of 660 or higher is generally required to qualify for the most competitive rates offered by major lenders.
Can I change lenders during a mortgage renewal?
Yes. In fact, shopping around is one of the best ways to improve affordability. However, you must ensure your financial health—including stable income and low debt—is in good standing to qualify with a new provider.
What is the current mortgage stress test rate?
As of early 2026, with average 5-year fixed rates at 4.40%, the stress test rate typically sits around 6.40% (the contract rate plus 2%).
Should I choose a fixed or variable rate in 2026?
The market is currently cautious. While fixed rates have declined slightly, bond yields remain volatile. A consultation with a broker can help you determine if the stability of a fixed rate or the potential future drops of a variable rate fits your specific risk tolerance
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