5 Mortgage Renewal Strategies to Reduce Your Rate

Owning a home brings many advantages, but it also comes with financial responsibilities. More than one million mortgages in Canada are set to renew in the coming years, and many homeowners will face higher interest rates when their terms end. A higher rate can increase what you pay over the life of your mortgage and strain your monthly cash flow and budget.

If you are renewing your mortgage this year, beginning your research early can help you secure a better interest rate, improve your cash flow management and keep your long-term financial plan on track. Below are five practical strategies to consider when renewing or refinancing your mortgage in 2025.

1. Plan ahead for your mortgage renewal

Timing matters. While you may know your renewal date, most lenders allow you to start the renewal process up to 120 days before your term ends. Beginning early gives you time to compare rates, read the fine print of different offers and avoid rushed decisions that could cost you.

Contact your lender to confirm your renewal deadline and request a copy of your current mortgage details. Knowing the remaining balance, interest type (fixed or variable), prepayment privileges and any penalties will make it easier to compare alternatives and negotiate better terms. Not every mortgage is the same, so clarity about your existing agreement is essential.

2. Shop around and consider moving your mortgage

Don’t assume you must stay with your current lender. Shopping around at renewal often uncovers lower interest rates and better features. Consider credit unions and regional lenders as well as major banks—some credit unions offer competitively low rates and flexible products.

As an example, Cambrian Credit Union, which serves Manitoba through branches in Winnipeg and Selkirk and its Digital Branch, is advertising a four-year fixed-rate mortgage at 3.94%. Cambrian also provides options such as debt consolidation and refinancing, and in many cases will cover mortgage transfer fees when you switch your mortgage.

3. Consolidate your loans

Using your mortgage to consolidate higher-interest debt can lower your overall interest costs. If you carry high-interest credit card balances (often 20% APR or more) or need funds for major expenses like renovations or a vehicle, tapping home equity through a mortgage refinance can reduce your interest rate and simplify payments.

For instance, a homeowner with $10,000 in credit card debt and $15,000 needed for renovations could add $25,000 to their mortgage at renewal. Although the mortgage balance increases, the interest rate on a mortgage is typically far lower than credit cards, which may reduce total interest paid and combine multiple monthly bills into one manageable payment.

Debt consolidation isn’t suitable for everyone. Run the numbers to ensure the long-term savings outweigh the costs and that you won’t extend repayment so long it negates the benefit.

4. Pay down your mortgage

Reducing your principal before renewal can meaningfully lower the interest you pay. If you have accessible savings—such as a high-interest savings account or a tax-free savings account (TFSA)—it may make sense to apply some funds to your mortgage principal.

Ask your lender about lump-sum payments and prepayment privileges. Many mortgages permit one or two extra payments per year without penalty. Cambrian Credit Union offers notable flexibility: for closed fixed- or variable-rate mortgages, you can prepay up to 20% of the original mortgage amount annually without penalty. With a variable-rate open mortgage at Cambrian, you can prepay any amount at any time without penalty.

5. Consider breaking your mortgage early

Switching lenders or changing products before your mortgage term ends can yield lower rates but may trigger a prepayment penalty. Calculate whether the long-term interest savings outweigh the penalty cost before breaking your mortgage. Tools like a mortgage penalty calculator can help clarify the trade-offs.

Some lenders also waive certain transfer-related fees to make switching cheaper. For example, Cambrian Credit Union covers title insurance fees and property valuation fees for homeowners who transfer their mortgage. If you live in Manitoba, speaking with a mortgage advisor can help you understand all potential savings and costs.

Make the most of your mortgage renewal

Mortgage renewal is a chance to reassess your financing and find ways to save. Start early, compare multiple lenders and evaluate options such as switching, consolidating debt, making prepayments or temporarily adjusting your loan structure. Taking a deliberate approach can reduce your costs and improve your monthly budget.

Read more about mortgages:

• Mortgage payments going up at renewal? Here’s what to do
• Lowest Winnipeg mortgage rates: Save with Cambrian Credit Union
• I want to switch mortgage lenders—do I have to pass the stress test again?
• The complete guide for first-time home buyers in Canada
• Mortgage payment calculator