Three renewal risks brokers can’t ignore in today’s mortgage cycle

Canada is amid the largest mortgage renewal cycle in its history. For brokers stewarding clients forward in the current market, there’s a well-known saying that’s particularly apt: “Fail to plan, plan to fail.”

“Brokers are often surprised by renewals: that means they don’t have time to really dig into the market to find the best solution for their clients,” says Mayank Goyal, Business Development Manager at Neighbourhood Holdings. “Staying on top of them would go a long way — and would trigger easy wins.”

The three pillars of renewal-related stress

The story is told by the numbers. Industry estimates suggest around 1.2 million mortgages renewed last year, the majority at 200–300 basis points higher. Debt is also at an all-time high, with residential mortgage debt crossing roughly $2.3 trillion and household debt sitting at around $1.82 per dollar of disposable income. In short, the stakes are high.

Niloo Fazeli, Senior Business Development Manager, predicts the greatest renewal-related stress will emerge in three areas: high-leverage renewals with limited principal reduction, borrowers relying on refinance exits that are taking longer than expected, and “good borrowers, wrong structure” situations. 

Neighbourhood Holdings is very intentional about positioning itself as a structured solutions provider at key transition points in the credit cycle. Rather than simply rolling deals forward, Fazeli explains, “our focus is on re-underwriting the current reality of the asset, identifying whether the original exit still holds, and where needed, restructuring the file to create a viable path forward.”

The goal, she notes, is to support strong borrowers through timing gaps and market shifts, while still maintaining disciplined underwriting and protecting investor capital.

Pillar 1: High-leverage renewals and shrinking equity

The softening condo market is a textbook example of the first pillar, and a perfect illustration of what Neighbourhood Holdings does differently. While many lenders might issue a demand or refuse to renew when a loan-to-value ratio edges higher, Neighbourhood Holdings takes a different approach. The lender refuses to penalize borrowers for an economic downturn they can’t control and looks for every opportunity to say yes — a point of pride, Thibaut Couture, Senior Business Development Manager, says.

“The key for us is conduct over collateral; if a borrower has been making their payments on time, we’re not going to automatically non-renew just because the LTV has shifted,” he adds. “We’ll adjust the interest rate to reflect the higher LTV and current market rates, and the renewal process remains straightforward despite property value fluctuations.”

Internally, Neighbourhood Holdings supports borrowers with a proactive six‑week timeline for renewal offers — well beyond the 21‑day regulatory minimum — so brokers and borrowers can evaluate the market and secure alternative financing without the pressure of a looming deadline.

“This lead time is the most overlooked tool for preventing ‘emergency’ renewals that don’t fit the borrower’s long-term needs,” Couture notes, adding that keeping friction low is critical in these situations.

Exit and renewal fees can add up quickly, meaning in some cases clients can face several thousand dollars just to roll their contract — especially if decisions are made under tight timelines. Neighbourhood Holdings aims to avoid adding to that strain by offering not only among the lowest rates in the private sector, but also very low fees. A $295 renewal fee translates to less stress for the client and, importantly, their finances won’t be impacted, allowing them to get back on their feet faster.

Pillar 2: Refinance exits that don’t land on time

On paper, the plan is straightforward: the borrower will move to a prime lender at maturity, supported by cleaner credit and stronger income or improved documentation. In practice, things can go awry. Appraisals can disappoint, for example, or underwriting can tighten, meaning approvals can drag and leave borrowers exposed as the term expiry approaches.

While Neighbourhood Holdings is always on the lookout for potential future issues, “this is collaborative work,” Goyal notes.

“Communication between us, brokers, and borrowers is key. Always,” he says.

When a refinance is central to the strategy, the lender is looking for a clearly defined and realistic path that’s outlined well before the file is up against a deadline. If the exit strategy seems at all fuzzy, the team works with the broker and the borrower to sharpen it.

The goal is a clear plan as early as possible, and well ahead of submission.

“That gives more time for us to work on it and offer the best solution — and more time for the broker to find another alternative if we’re not the best fit,” Goyal says. “Either way, the client will be grateful for feeling supported in an always-stressful situation.”

For brokers, the practical takeaway is to start early. Fazeli recommends engaging clients 120–150 days out from maturity, especially when a refinance exit is central to the plan. That window gives brokers time to confirm whether the exit still holds, surface any red flags before they become emergencies, and, if needed, position a short-term renewal as a strategic placeholder while the refinance gets finalized.

“This is a great way to make sure your clients don't feel rushed,” Fazeli says. “Some brokers even do a 'soft touch' at six months, then get serious at the four-month mark.”

The warning is clear: a “wait-and-see” approach, hoping things will resolve at the last minute, won't get the broker — or their client — where they need to be.

Pillar 3: Good borrowers, wrong structure

Sometimes the sticky part of a file is less about credit quality and more about misalignment.      Couture points out that some of the most challenging renewals involve borrowers who have done everything right, but whose mortgage wasn’t structured around how their situation would actually evolve.

“Beyond the interest rate, alternative renewals are often defined by their ability to provide a strategic ‘bridge’ toward a long-term goal,” he says. “While rates get the headlines, the structure of the payment is often more critical for the exit plan.”

Alternative solutions often utilize interest-only payments or extended 40‑year amortizations to maximize monthly cash flow, which allows borrowers to divert funds toward debt consolidation or credit repair. Or put another way, “the very actions needed to qualify for a prime lender at the next renewal,” Couture adds.

Another common oversight Neighbourhood Holdings sees is sticking with a closed term when an exit, like a sale or refinance, is imminent. Before recommending a term length, brokers should ask that critical question about whether there’s a sale, refinance, or switch on the horizon before the next renewal date.

“Opting for an open term provides immense flexibility, and although it carries a higher rate — specifically a 1% increase with us — it eliminates the heavy prepayment penalties that can trap a borrower in a deal when they’re ready to leave,”      Couture explains. “For a good borrower in the wrong structure, that trade-off can be the difference between a painful renewal and a clean, well-timed exit.”

Bringing it all together: planning past the renewal date

Across all three pillars, the through-line is the same: proactive planning beats reactive problem-solving. When brokers start the conversation early, pressure-test exit strategies and think beyond the headline rate, renewals become an opportunity to drive clients closer to their long-term goals.

For Fazeli, that’s where Neighbourhood Holdings adds the most value.

“We work with brokers early to anticipate renewal risk, preserve borrower options, and create sustainable exit paths,” she explains. “Together, we move away from reacting at renewal time to planning for it, so borrowers have real, workable strategies rather than limited options under pressure.”

This article was produced in partnership with Neighbourhood Holdings