Payments & Amortization
An Annual Mortgage Review Checklist for Canadians
Use this annual mortgage review checklist to check rates, payments, amortization, penalties, and renewal timing so you stay ahead of your Canadian mortgage.
An annual mortgage review is a once-a-year check of your rate, payment, balance, prepayment room, and remaining term so you can spot problems early and plan ahead. It takes about 30 minutes, and it works whether your mortgage sits with a big bank, a credit union, or a broker-arranged lender. Put it in your calendar next to your renewal date.
Why an Annual Mortgage Review Matters
Your mortgage changes slowly and quietly. The balance drops, the split between interest and principal shifts, and the rate that looked competitive when you signed may no longer reflect the market. Add a job change, a new baby, a renovation, or a rate move by the Bank of Canada, and last year's assumptions may not fit this year's life.
A review is also the cheapest form of planning you have. You cannot usually renegotiate a closed mortgage mid-term without a penalty, but you can change a prepayment amount, adjust a budget line, or start shopping months before renewal. Federally regulated lenders must follow OSFI Guideline B-20 when they underwrite, and the federal mortgage stress test applies when you switch lenders at renewal or refinance. It generally uses the higher of your contract rate plus two percentage points or the published qualifying-rate floor — confirm the current floor with OSFI or your lender.
The Annual Mortgage Review Checklist
Work through these items in order and write the answers down. Next year's review will take ten minutes.
- Statement: pull your latest mortgage statement or sign in to online banking.
- Rate: note your current rate, whether it is fixed or variable, and when it was set.
- Payment: confirm the amount, the frequency, and whether it is accelerated.
- Balance and amortization: compare this year's balance with last year's and check the remaining amortization.
- Prepayment room: find your annual lump-sum limit and any increase-payment allowance.
- Penalty basis: note how a fixed or variable penalty is calculated, including the interest rate differential (IRD).
- Renewal date: record the maturity date and how many months remain.
- Budget: recalculate housing costs as a share of your take-home pay.
Check Your Rate, Payment, and Amortization Progress
Start with the numbers. Compare this year's balance against last year's to see how much principal you actually retired. If that drop looks small, the reason is usually the shape of amortization: early in a mortgage, most of each payment covers interest, so modest principal reduction is normal.
Then look at how the payment itself is built. Understanding how mortgage payments are calculated explains why frequency and compounding matter so much. Canadian mortgages compound semi-annually rather than monthly, which is why a small change in payment frequency can shave interest over time. If your lender allows it, test whether a faster frequency fits your paycheque cycle before you commit to it. Run the new numbers through a mortgage payment calculator so you are comparing real figures, not guesses.
Review Prepayment Privileges and Breakage Costs
Most closed mortgages allow a lump-sum prepayment each year plus an option to raise your regular payment, but the limits vary widely. Read your own terms instead of assuming. Prepaying a fixed-rate mortgage locks in savings at your current rate; with a variable-rate mortgage the benefit depends on where prime rate goes next, so weigh that before you commit extra cash.
If you are considering breaking the mortgage — to refinance, move, or switch lenders — the exit cost matters more than anything else. A variable-rate mortgage often carries a penalty around three months' interest, while a fixed-rate mortgage typically carries the greater of three months' interest or the IRD. The IRD can be substantial when your contract rate sits well below current rates. Read how the interest rate differential is calculated and request a written penalty quote before you decide anything.
Reassess Your Budget and Debt Ratios
Housing is only affordable in context. Add your mortgage payment, property taxes, heating, and half of any condo fees, then divide by gross monthly income — that is your Gross Debt Service (GDS) ratio. Add your other debt payments, such as car loans, credit cards, and lines of credit, to get your Total Debt Service (TDS) ratio. Lenders use these measures, not a generic debt-to-income figure. See how lenders use GDS and TDS ratios to judge affordability.
A review is also a good time to check the wider picture: emergency fund, home insurance, property tax changes, and any maintenance you have deferred. A mortgage that fits your budget but not your life is still a problem.
Plan Around Renewal and Rate Moves
If you have fewer than 12 months left on your term, treat the review as the start of your mortgage renewal plan. Gather your renewal offer, compare it with a few other lenders, and check whether switching would require you to requalify under the stress test. Moving a mortgage to a new lender is treated like a new application by federally regulated lenders, so income and credit documents come back into play.
Watch the signals that move rates: the Bank of Canada policy rate, prime rate at your lender, and federal housing announcements. Do not act on a headline alone. Check what your own contract says and what a switch would cost after penalties and fees.
Review More Often in These Situations
| Situation | Why review sooner |
|---|---|
| Variable or prime-linked rate | Your payment or trigger point can shift as prime moves. |
| Renewal within 12 months | You need lead time to compare offers and arrange a switch. |
| Income change | A raise, job loss, or parental leave changes affordability and qualifying. |
| Planned renovation or refinance | Penalty, equity, and appraisal numbers all matter. |
Keep a one-page record of your rate, payment, balance, prepayment limit, and renewal date. That single page makes every future decision faster, whether you are prepaying, switching, or simply confirming that you are on track with your own plan.
Frequently asked questions
How often should I do an annual mortgage review?
Once a year is a solid baseline — enough to track your balance and payment trends without over-managing the file. Review again whenever something changes: a Bank of Canada rate announcement, a shift in income, a planned renovation, or a renewal within 12 months. If you have a variable-rate mortgage, check after each prime rate move to see how your payment or trigger point is affected.
What should I check at mortgage renewal?
Start six months out. Compare your lender's renewal offer against a few alternatives, confirm whether switching would require requalifying under the federal stress test, and get written penalty and discharge figures for your current mortgage. Also confirm your amortization schedule still matches your goals, since renewing without changes keeps the existing pay-down timeline rather than resetting it.
Does an annual mortgage review cost anything?
Reading your statement and running numbers through a calculator is free. Costs appear only when you act: a penalty for breaking a closed mortgage, an appraisal or discharge fee when switching lenders, and legal fees in some provinces. Always request written quotes before committing, and confirm current fees with your lender rather than relying on general estimates.
Can I lower my mortgage payment at an annual review?
Sometimes, but not always. Some lenders let you reduce a prepayment amount or revert to your original scheduled payment. Lowering the scheduled payment itself usually requires re-amortizing through a refinance, which may mean requalifying under the federal stress test. With a variable-rate mortgage, your payment may already adjust automatically as prime rate changes. Ask your lender what is permitted mid-term without a penalty.