Definition

A mortgage renewal in Ontario happens when your mortgage term ends (commonly after 1–5 years) and you must agree to new terms to continue repayment. If interest rates have increased or your financial situation has changed, your new payments may be significantly higher than before. Many homeowners in London, Ontario and across the province experience payment increases at renewal due to higher market rates.

Quick Answer

If you can’t afford your new mortgage payments at renewal, you still have options. You can negotiate new terms with your current lender, switch to another lender, extend your amortization (if eligible), work with a mortgage broker, explore alternative financing, or sell your home before default occurs. Acting at least 90–120 days before your renewal date gives you the widest range of solutions and helps protect your equity.

Why Mortgage Payments Increase at Renewal

Mortgage payments often rise at renewal because:

Interest rates are higher than when you originally signed your term.
You previously had a discounted or promotional rate.
Your remaining amortization is shorter, increasing required payments.
Household income has changed since your original approval.

Even a modest rate increase can significantly affect monthly costs, especially on larger mortgage balances.

Step 1: Contact Your Current Lender Immediately

Before assuming you have no options, speak directly with your lender.

Ask whether they can:

Offer a different term length
Adjust payment frequency
Extend amortization (if permitted)
Provide a short-term extension while you review alternatives

Lenders generally prefer structured repayment solutions over default situations.

Step 2: Work With a Mortgage Broker

If your renewal offer is unaffordable, a mortgage broker can compare options from:

Major banks
Credit unions
B lenders
Trust companies

Switching lenders requires full income verification and underwriting. However, some institutions may offer more flexible qualification criteria than your current lender.

Step 3: Review Alternative Financing Carefully

If traditional lenders decline or rates remain unaffordable, alternatives may include:

B lender mortgages (higher rates, more flexible approval standards)
Private mortgages (typically short-term and higher cost)
Adding a co-signer
Debt restructuring strategies

These solutions are often temporary and should be evaluated based on long-term affordability.

Step 4: Recalculate Your Budget Realistically

Before agreeing to any renewal:

Calculate your projected monthly payment.
Review household expenses carefully.
Determine whether the payment increase is temporary or structurally unaffordable.

If the payment significantly limits your ability to cover essential expenses, a housing change may need to be considered.

Step 5: Consider Selling Before Default

If no sustainable mortgage solution exists, selling the property before missing payments may preserve your equity and credit standing.

Benefits of selling before default include:

Avoiding foreclosure or power of sale proceedings
Protecting your credit score
Controlling the timing of the sale
Accessing remaining home equity

For homeowners in London, Ontario, reviewing current local market conditions can help determine realistic timelines and pricing expectations.

Warning Signs You Should Act Immediately

You are within 60–90 days of renewal with no confirmed plan.
You are relying on credit cards or loans to cover housing costs.
Your lender has declined renewal.
You have already missed payments.
Your debt-to-income ratio has increased significantly.

Acting early generally leads to better financial outcomes.

Frequently Asked Questions

Can a lender refuse to renew my mortgage in Ontario?

Yes. In Ontario, lenders are not legally obligated to renew a mortgage at the end of its term. Renewal approval depends on internal lending policies and your current financial profile.

Will I lose my home immediately if I can’t afford renewal?

No. A mortgage does not automatically result in foreclosure at renewal. However, if a new agreement is not secured by the maturity date and payments are missed, enforcement action such as power of sale can begin.

Is selling better than foreclosure?

In many cases, selling voluntarily before default allows homeowners to protect equity and reduce long-term credit damage. Foreclosure or power of sale proceedings typically reduce control over timing and financial outcome.

What to Do If You Can’t Afford Your Mortgage Renewal

If your renewal payment is unaffordable, the most important step is to act early. Speak with your lender, compare alternatives, and assess your budget before your renewal date arrives. When no long-term mortgage solution is viable, selling before default can protect equity and provide financial stability.