Mortgage renewal: compare the payment before choosing a rate

What does a higher renewal rate change?

With $350,000 owing at renewal and 20 years of remaining amortization, the monthly payment is $2,206.42 at 4.5%, $2,492.66 at 6% and $2,692.59 at 7%, using nominal rates compounded semi-annually. The 6% case costs $286.24 more each month than 4.5%. These are entered scenarios, not current offers or forecasts.

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Use the balance and time remaining at renewal

The $350,000 is the balance already owing when the renewal begins. The 20 years is the remaining amortization, not a new 25-year clock. All three cases use the same starting balance, five-year term, monthly frequency and Canadian semi-annual compounding assumption.

For a renewal happening now, enter that balance, remaining amortization and proposed rate in the calculator’s main inputs. Its separate Plan for renewal controls describe a future term-end change. Applying a future renewal five years later would answer a different question.

References: FCAC: Renewing your mortgage

Follow both the payment and the remaining debt

At 6%, the scheduled monthly outlay is $2,492.66 compared with $2,206.42 at 4.5%, a $286.24 monthly difference. Over twelve full payments, that difference is $3,434.88. The table also reports interest paid during the five-year term and debt remaining after 60 payments.

The 7% case has a larger payment and still leaves more principal at the term end than the 4.5% case. Comparing payment size alone misses that difference. The figures exclude property taxes, insurance, optional lender products and switching costs.

References: FCAC: Renewing your mortgage

How the example is checked

For each entered nominal rate j, convert to the equivalent monthly rate i = (1 + j / 2)^(1/6) - 1, with j expressed as a decimal. Calculate the payment on $350,000 over 240 months. Round the regular payment to cents, then round interest to cents before each monthly principal reduction.

A separate 50-digit Decimal recurrence checks the quoted payments, total interest over 60 periods and remaining balances. The comparison stops at the new term end for these figures. It does not claim to know the next renewal rate or the lifetime cost under future contracts.

References: FCAC: Renewing your mortgage

Keep affordability, contract terms and fees in view

An extended amortization can lower a payment while increasing the time debt remains outstanding and the interest paid under otherwise comparable assumptions. Changing amortization also changes the comparison. Lender approval, eligibility and contractual limits remain separate from the calculation.

Compare the lender’s actual quote and charges, and review payment flexibility, prepayment privileges and switching costs. The calculator does not perform underwriting, recommend a lender or establish that a quoted contract is suitable for your situation.

References: FCAC: Renewing your mortgage; FCAC: Paying off your mortgage faster