The Victoria B.C. Mortgage Blog

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If you're among the thousands of Canadian homeowners with a mortgage renewal coming up in 2025, you might already be concerned about what rising interest rates could mean for your monthly payments. During the pandemic, many Canadians took advantage of historically low rates. Now, as these mortgages approach renewal, many borrowers will face increased payments. But don't panic-we're here to guide you through this transition.

Why are payments going up?

During the pandemic's peak, interest rates in Canada dropped to unprecedented lows, allowing homeowners to secure mortgages with exceptionally favourable terms. Many Canadians chose variable-rate or fixed-rate mortgages at these low rates. As these terms now expire, renewals are happening in a different environment-interest rates are considerably higher than when many secured their initial mortgages.

According to the Bank of Canada's recent reports, about 60% of mortgages will renew in 2025 and 2026. For some homeowners, this might mean facing monthly payment increases of several hundred dollars or more.

What does this mean for homeowners?

Higher mortgage payments can significantly impact your monthly budget. However, this does not mean you're without options. Preparation, strategy, and professional advice can help ease the financial pressure.

What you can do now

1. Review Your Current Financial Situation

Before your renewal date arrives, take a close look at your finances. Calculate your monthly income and expenses, and identify areas where you can cut costs. This proactive approach will help you evaluate your ability to manage higher payments.

2. Consider Refinancing or Extending Your Mortgage

One effective way to manage increased payments is by refinancing your mortgage or extending the amortization period. Although extending your mortgage means you will pay interest over a longer time, it can significantly lower your monthly payments, giving you immediate financial relief. However, it's important to consider the short-term benefit of reduced payments against the long-term cost of paying additional interest.

3. Lock in Your Rate Early

If your renewal date is approaching and you are worried about possible rate increases, consider talking to your lender or mortgage broker about locking in your rate early. Securing your rate in advance can help protect you from potential future hikes.

4. Get Professional Advice

Mortgage renewals can be complex. Working with a mortgage professional can provide valuable insights into your options. Our brokerage specializes in helping homeowners find solutions tailored specifically to their financial situations. We can assist you in exploring alternatives such as refinancing, debt consolidation, and adjusting your mortgage terms to ensure your payments are manageable.

Common FAQs about Mortgage Renewals in 2025

Q1. How much could my monthly payments increase upon renewal?

The exact amount your payments will increase depends on several factors, including your current interest rate, your new rate upon renewal, and your remaining mortgage balance. Generally, borrowers renewing mortgages obtained during the pandemic at rates around 2-3% might see their rates increase to 4-6%, potentially raising monthly payments by hundreds of dollars.

Q2. Should I switch from a variable rate to a fixed-rate mortgage?

Choosing between a variable-rate and a fixed-rate mortgage depends on your risk tolerance and financial stability. Fixed rates offer certainty, especially valuable during times of economic unpredictability, while variable rates historically save money over the long term but come with uncertainty in monthly payment fluctuations. We recommend discussing your specific situation with a mortgage advisor to choose the best option for you.

Q3. Is refinancing my mortgage a good idea right now?

Refinancing can be beneficial if it helps reduce your monthly payment or consolidate higher-interest debts. However, it's crucial to evaluate your unique financial circumstances carefully. While refinancing may lower your payments now, extending your mortgage duration will mean paying more interest overall. A detailed conversation with one of our mortgage specialists can help determine if refinancing makes sense for your specific situation.

How We Can Help

We understand that navigating mortgage renewals in a changing interest rate environment can be stressful. Our team is committed to helping you clearly understand your options and guide you through the process with ease. We offer personalized consultations to discuss your financial goals and create tailored strategies to manage your renewal smoothly and confidently.

Don't let rising rates overwhelm you. Contact us today to discuss your upcoming mortgage renewal, and let's explore the best solutions for your financial peace of mind.

For more information contact us, the Mortgage Designers, Your Victoria BC Mortgage Brokers of Choice today!