Mortgage Renewing in 2025? Tips to Save Money!

Mortgage Renewing in 2025? Tips to Save Money!

Royal LePage’s 2025 Mortgage Renewal Survey recently revealed around 1.2 million mortgages will renew in 2025, with 85% secured when interest rates were at or below 1%. Mortgage Renewing in 2025? Tips to Save Money!

While rates have declined since mid-2024, they remain above pandemic-era lows, meaning many homeowners will face higher mortgage costs upon renewal.

“When it comes to post-pandemic mortgage renewals, many Canadians have avoided the worst-case scenario of having to sell their homes due to the inability to cover the cost of their mortgage, thanks to solid employment trends and declining interest rates,” said Phil Soper, president and CEO, Royal LePage. “Nevertheless, some will face a substantial rise in their mortgage costs, putting added pressure on their household finances. Many in this situation are exploring options to lower their monthly fees, such as extending their amortization period; a tactic which has proven popular.”

1 in 10 Homeowners are also considering downsizing, relocating, or renting amid mortgage renewals. Are you one of them?

Variable-rate mortgages rise in popularity

With interest rates on a downward trajectory, variable-rate mortgages are gaining in popularity. According to the survey, 66% of Canadians with a mortgage renewing this year say they plan to obtain a fixed-rate loan upon renewal (down from the 75% who currently hold fixed-rate mortgages), and 29% say they will choose a variable-rate loan (up from the 24% who currently hold variable-rate mortgages).

Since last summer, the Bank of Canada has made several cuts to its overnight lending rate amounting to a decline of 200 basis points thus far, driving variable mortgage rates down in tandem. For homeowners looking to reduce their monthly payments or pay down their principal faster, variable-rate mortgages have become an increasingly attractive option in light of today’s declining rate environment and the likelihood of further cuts this year,” added Soper. 

Mortgage Stress Test Removal: More Flexibility for Homeowners at Renewal

In November 2024, OSFI (The Office of the Superintendent of Financial Institutions) removed the mortgage stress test for uninsured borrowers switching lenders at renewal, as long as loan terms remain unchanged. This change benefits homeowners by offering more flexibility to explore refinancing options without the stress test barrier. It allows homeowners to shop for better rates, reduce borrowing costs, and consider adjusting their mortgage terms without facing stringent eligibility requirements. Overall, this gives borrowers a greater opportunity to manage their finances and potentially save money in a fluctuating market.

Timing Your Next Home Purchase Could Save You Money

When you receive your mortgage renewal notice, it’s important not to accept the first offer you receive. Instead, take the time to explore various payment plans and compare options from different lenders to ensure you’re getting the best deal available. By shopping around, you may be able to secure a better interest rate, lower monthly payments, or more favorable loan terms.

This change makes it easier for homeowners to refinance and secure competitive rates without facing additional hurdles, ultimately allowing them to save money and better manage their finances.

So there you have it. Mortgage Renewing in 2025? Tips to Know to Save Money! Reach out to me, and together, we’ll make sure you make the most of your renewal and your next move.