Mortgage Renewal Stress and Debt in 2026

What Homeowners Should Know to Begin 2026

As 2026 begins, many Canadian homeowners are facing more than winter weather. If your mortgage is coming up for renewal, rising interest rates, increased household expenses, and lingering debt may be creating added stress.

Mortgage renewal debt in Canada has become a growing concern, particularly for homeowners who are also carrying credit card balances, personal loans, or lines of credit.

At Litvack Group, we work with Ontario homeowners who are navigating debt while trying to protect their home and financial stability. This article explains why mortgage renewals feel more challenging in 2026, what you should review before renewing, and how debt relief and home equity options may help improve your position.

Why Mortgage Renewals Feel More Difficult in 2026

Rising Cost of Living Reduces Financial Flexibility

The cost of living continues to climb across Canada. Groceries, utilities, transportation, insurance, and property taxes are all higher than they were even a year ago. For many households, this leaves less room in the budget to absorb an increased mortgage payment.

Even a modest rate increase at renewal can result in hundreds of dollars more per month, placing strain on homeowners whose income has not kept pace with rising costs.

Personal Debt Limits Mortgage Renewal Options

Lenders review your debt-to-income ratio when assessing renewal terms. If you are carrying significant unsecured debt, such as credit cards or personal loans, your options may become limited.

Higher unsecured debt can lead to:

• Higher interest rates at renewal

• Shorter mortgage terms

• Reduced approval flexibility

• Reliance on alternative or private lenders

  
  

Debt does not just affect affordability. It affects lender confidence.

What Homeowners Should Review Before Renewing

Income Versus New Mortgage Payment

Before your renewal date, compare your household income to your expected mortgage payment under current rates.

Ask yourself:

• Has my income increased recently?

• Can I comfortably manage a higher payment?

• Will this affect my ability to cover essential expenses?

  
  

Using a mortgage renewal calculator from your bank or credit union can provide a helpful estimate.

Reviewing Debt and Monthly Cash Flow

Now is the time to review your full financial picture. List all outstanding debts, including:

• Credit cards

• Lines of credit

• Personal loans

  
  

Calculate how much of your monthly income is going toward debt repayment. If minimum payments dominate your budget, this may signal that absorbing a higher mortgage payment will be difficult without adjustments.

How Unsecured Debt Increases Mortgage Renewal Stress

Credit Cards and Lines of Credit Add Pressure

Unsecured debt is not tied to your home, but it directly impacts your financial health. Multiple high-interest balances increase monthly obligations and reduce available cash flow.

This can make mortgage renewal negotiations more stressful and limit your ability to adjust payments safely.

Minimum Payments Reduce Credit and Budget Flexibility

Paying only the minimum keeps balances high and credit utilization elevated. This can negatively affect your credit profile and reduce lender confidence at renewal time.

It also ties up money that could otherwise support housing costs or long-term financial stability.

Options to Consider Before and During Mortgage Renewal

Educational Information Only

Budget Adjustments and Planning Ahead

Many homeowners benefit from a financial reset before renewal. This may include:

• Reducing discretionary spending

• Reprioritizing essential expenses

• Adjusting payment schedules where possible

  
  

Even small changes can improve confidence and cash flow when facing higher mortgage payments.

Understanding Debt Consolidation Options

Debt consolidation combines multiple debts into a single payment, often at a lower interest rate. This can be done through:

• Personal loans

• Home equity products

  
  

Consolidation can simplify payments and reduce interest, but it typically requires strong credit and stable income. For some homeowners, it may not be available if there is insufficient equity in their house or may introduce new risks if debt habits are not addressed.

How a Consumer Proposal Can Help Homeowners Under Debt Pressure

Why a Consumer Proposal Is Often Beneficial

A Consumer Proposal is a legal debt relief solution administered by a Licensed Insolvency Trustee. It is designed to help individuals regain control of unsecured debt while protecting essential assets, including their home.

A consumer proposal can:

• Stop interest from accruing on unsecured debts

• Reduce the total amount you are required to repay

• Freeze collection calls and legal action

• Improve monthly cash flow

• Create predictable, manageable payments

  
  

While a consumer proposal does not change your mortgage directly, it can significantly improve your ability to manage housing costs by freeing up cash flow and reducing financial stress.

Consumer Proposals and Homeowners

Many homeowners assume that debt relief automatically means bankruptcy. This is not the case. A consumer proposal is often a preferred alternative, especially for homeowners who want to stabilize finances and remain in their property.

If a consumer proposal is appropriate, it can help create breathing room so you can focus on maintaining mortgage payments and long-term stability.

When Home Equity May Be the Better Option

A consumer proposal is not always the right solution. If you have sufficient home equity and your income supports it, accessing equity through refinancing or a secured product may be more appropriate.

When debt relief is not the best fit, Litvack Group can connect you with a trusted mortgage broker to explore home equity options responsibly. Our goal is to ensure you understand all available pathways before making decisions.

Mortgage Renewal and Debt: Common Questions

Can Paying Down Debt Help Before Renewal?

Yes. Reducing unsecured debt improves cash flow and may strengthen your mortgage renewal position. Even partial repayment can increase financial flexibility.

Does Speaking to a Licensed Insolvency Trustee Affect My Mortgage?

No. Speaking with a Licensed Insolvency Trustee is confidential and does not impact your mortgage, credit report, or renewal process unless you choose to proceed with a formal solution.

Who Should I Speak With First?

Speak with:

• A mortgage professional if you are reviewing rates, renewal terms, or refinancing

• A Licensed Insolvency Trustee if debt is limiting your ability to manage household expenses

  
  

Each professional provides different insight. In many cases, both perspectives are helpful.

Final Thoughts: Regain Control Before Your Mortgage Renews

If your mortgage is renewing in 2026 and you are also managing unsecured debt, taking action early can reduce stress and protect your financial future.

At Litvack Group, we focus on education, clarity, and practical solutions for Ontario homeowners. Whether that involves debt relief, budgeting guidance, or a referral to explore home equity, our priority is helping you make informed decisions with confidence.

Get Ahead of Debt Before Your Mortgage Renewal

If debt is creating stress as your mortgage renewal approaches, a free, confidential consultation with a Licensed Insolvency Trustee can help you understand your options.

Contact Litvack Group today to explore solutions and build a plan that supports long-term stability.

Disclaimer

This article is for informational purposes only and does not provide legal, financial, or mortgage advice. Individual circumstances vary. Always consult a qualified professional for guidance specific to your situation.