Mortgage Renewal Denied? What to Do Next

If you have a mortgage, you likely know it must be renewed periodically—usually every two to five years, depending on your chosen term—until it is fully paid off. What many homeowners don’t realize is that lenders are not legally required to renew a mortgage when the term ends.

Banks and other mortgage lenders rarely refuse renewals without cause. If you’ve been making your payments on time and in full, they generally want to keep your business. However, lenders may decline to renew if they believe your risk profile has worsened—for example, if you’ve missed payments, experienced a major drop in income, increased your debt, suffered a credit-score decline, or if rising interest rates mean your monthly carrying costs will become unaffordable.

Declined renewals are still uncommon—more than 99.8% of residential mortgage borrowers are reportedly in good standing, according to the Canadian Bankers Association. But there are growing concerns that renewal refusals could rise. Homeowners who took out mortgages in 2021 and early 2022, when house prices were high and interest rates were at historic lows, face substantial payment increases at renewal. The Bank of Canada has estimated median payment increases of around 22% in 2024, nearly 25% in 2025 and more than 30% in 2026. In addition, a survey conducted for Mortgage Professionals Canada found that about 23% of mortgage holders say even a small rate rise could make payments difficult to manage.

If your mortgage renewal is declined, you still have options. Below are practical steps to consider so you can protect your home and financial stability.

Speak to your current lender

Start by asking why the renewal was denied. Some problems are straightforward to fix. For example, if the issue is a sudden drop in your credit score, review your credit reports for errors and dispute any inaccuracies. If your credit has legitimately fallen, ask whether the lender would reconsider under specific conditions, such as adding a co-signer with stronger credit or agreeing to a short-term repayment plan.

Refer to the Canadian Mortgage Charter

The federal government worked with financial institutions to create the Canadian Mortgage Charter, which sets out relief options lenders are encouraged to offer homeowners facing higher renewal rates. These measures can include temporarily extending amortization to lower monthly payments, permitting lump-sum payments to prevent negative amortization, and waving fees associated with those accommodations. The charter is not legally binding, but the government has urged banks to follow it and will monitor compliance. If your lender refuses to consider charter measures, you can file a complaint with the Financial Consumer Agency of Canada (FCAC).

Reach out to other banks

The Canadian Mortgage Charter also makes it easier to switch lenders at renewal in certain cases: federally regulated banks and financial institutions need not apply the stress test if you’re transferring an insured, high-ratio mortgage to a new lender. That means new lenders can qualify you based on current market rates rather than a higher qualifying rate, which may improve your chances of obtaining refinancing elsewhere. Keep in mind, however, that the underlying reasons your current lender declined the renewal—such as poor credit or an elevated debt load—may still concern other institutions.

This table compares mortgage interest rates from providers in Canada:

Consult a mortgage broker

A licensed mortgage broker can be a valuable ally. Brokers know which lenders are more likely to work with borrowers in challenging situations and can shop your application across multiple institutions. They can negotiate terms on your behalf and advise on how to improve your presentation to prospective lenders, such as consolidating or restructuring debt, improving payment histories, or securing a co-signer if needed.

Approach alternative or private lenders

If major banks or credit unions won’t refinance your loan, consider smaller financial institutions, trust companies or mortgage investment companies—often called B lenders. They typically accept higher-risk borrowers or those with more debt or lower credit scores, though at higher interest rates and sometimes stricter terms. If a B lender is not an option, private lenders may provide short-term financing, but they charge the highest rates and often carry greater risk and fewer consumer protections.

Sell your home

Selling your property is not ideal, but it may be the most practical solution if you cannot renew or refinance. If you do nothing and remain unable to meet mortgage obligations, your lender can foreclose, repossess the property and sell or rent it to recover the debt. Under the Canadian Mortgage Charter, banks are expected to waive prepayment penalties when homeowners sell a primary residence because they are experiencing financial hardship, which can ease the process of selling to pay off the mortgage.

Mortgage up for renewal?

If your mortgage comes up for renewal within the next year, don’t wait until the last minute. Check your credit score, calculate your current debt-to-income ratio, and use a mortgage calculator to estimate your future monthly payments under different interest-rate scenarios. Early preparation can reveal potential obstacles and give you time to improve your financial position so your lender has fewer reasons to decline your renewal.

Read more about mortgages:

• The best 5-year fixed mortgage rates in Canada
• Mortgage renewal calculator
• 6 things to consider before borrowing from the Bank of Mom and Dad
• How much income do I need to qualify for a mortgage in Canada?

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