How a renewal changes your payment
A Canadian mortgage is normally amortized over 20 to 30 years but the rate is only locked for the length of the term, often five years. When the term ends you renew the remaining balance for a new term at whatever rate is available then. The amortization keeps counting down, so at renewal you are re-pricing a smaller balance over a shorter remaining period.
That is why the payment can move sharply in either direction. If the new rate is higher than the one you had, the payment goes up and you pay more interest over the rest of the amortization. If the new rate is lower, the payment goes down. This calculator keeps the amortization on its existing schedule and only changes the rate, so you see the effect of the rate by itself.
Semi-annual compounding
Canadian fixed-rate mortgages compound interest semi-annually, not monthly. The effective monthly rate is therefore slightly lower than dividing the annual rate by twelve. This page applies the correct conversion, so the payment lines up with what a Canadian lender quotes.
FAQ
Does the amortization restart at renewal?
Not automatically. By default you carry on with the amortization you have left. Some lenders will let you extend it, which lowers the payment but increases total interest. Enter a longer figure in the years field to see that effect.
Can I shop around at renewal?
Yes. You are not obliged to stay with your current lender, though switching means requalifying and can involve discharge, appraisal or legal costs. TaxTally does not quote rates or refer lenders — it only does the arithmetic on numbers you supply.
Why does the extra interest look so large?
It is measured across the whole remaining amortization, not just the next term. Your actual result depends on what happens at each future renewal, which nobody can know in advance.
Estimate only. Excludes property tax, insurance, CMHC premiums and any fees. Not financial advice.