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More than a million Canadian homeowners will need to renew their mortgages in 2026, while those waiting to buy could decide prices have dropped enough to make their move.
In order to secure the best mortgage possible, it’s important to be strategic and prepared. Part of this involves heeding the lessons of borrowers past – and 2025 was chock-full of them.
Here are some of last year’s top “mortgage mistakes” that borrowers should avoid:
1. Not locking into a fixed rate in time
One of the biggest missteps borrowers make is trying to time the market and gambling on how low bond yields – and by extension fixed mortgage rates – may go. In today’s uncertain global and economic times, that’s an especially tall order.
Bond yields were unpredictable in 2025, swinging wildly in response to a number of factors. These included the U.S. trade war and surprisingly strong Canadian economic data, which lowered the chance of central bank rate cuts.
In all, the Government of Canada five-year bond yield – which lenders use to price their five-year fixed terms – moved through a range of 78 basis points, from a high of 3.28 per cent in January to a low of 2.5 per cent in April (a reaction to Mr. Trump’s “Liberation Day” tariff announcement), before settling into the 2.9-per-cent range at the end of the year, where it remains today.
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Mortgage shoppers who didn’t pounce on that April low missed out on considerable savings. The lowest five-year mortgage rate in Canada had fallen in tandem to 3.74 per cent, a level not seen since the summer of 2022. This didn’t stick around for long, and by May the rate had risen to 3.84 per cent.
Now, 10 basis points may not seem like a lot, but it adds up fast. On a $900,000 home purchased with a $65,000 down payment, that equals $47 more a month on the mortgage – $564 a year. It also means paying $4,133 more in interest alone over a five-year term.
Now let’s say you waited until the fall and ended up with September’s low of 3.94 per cent – pricing that remains in effect today. At that rate, your monthly payment would balloon by $80 more a month – $960 a year – and you’d shell out an additional $7,858 in interest over the same five-year span.
The take-away here? If the current fixed rate is a bargain, don’t hedge your bets on where yields will head next.
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2. You signed right away when renewing your term
I’ve harped repeatedly in past columns that borrowers should avoid blindly signing the automatic mortgage renewal letter sent by their bank. The rate offered in these letters is typically not the most competitive, and you could save plenty by exploring other options and perhaps switching to another lender.
Another reason to not sign on the dotted line, though, is that once you do, your new rate goes into effect right away, even if your actual renewal date is still a few months off. And given that today’s rates are almost always higher for renewing borrowers, you want to avoid locking in for as long as you can.
If you plan to stick with your current lender, hold off until the deadline to sign – and don’t be afraid to try negotiating their offer down in the meantime. If you plan to switch to another lender, take the best rate they can offer you for up to 120 days.
There’s added reassurance here in the fact that if rate pricing drops during this period, lenders will typically float their offer down to match it – but they won’t increase it should rates rise. This way, you can enjoy the last few months at your current rate, with the guarantee that you’ll have access to the next best option once your term is up.
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3. You don’t take advantage of equity at renewal time
If you have other high-interest debt that you need to pay off quickly, it can make sense to pull money out of your home’s built-up equity and carry the debt instead at your much lower mortgage rate.
The problem for most borrowers is that doing so midterm is considered a refinance and entails paying penalties to break the mortgage. Renewal time presents a rare opportunity to rejig your numbers without paying fees.
Just be aware that if you’re switching lenders in the process, you’ll likely be stress tested again – but that can be well worth it if the numbers make sense.
Penelope Graham is the head of content at Ratehub.ca
