Mortgage renewal risks rise as jobless rate climbs

Canada’s unemployment rate reached 6.9% in October 2025, leaving more homeowners navigating mortgage renewals without steady employment. While the situation creates anxiety, mortgage professionals say renewals differ significantly from new applications, and understanding these distinctions can help protect homeownership. 

“The only reason they would check something is if you defaulted or you haven’t been making payments,” said Leah Zlatkin, licensed mortgage broker and LowestRates.ca expert. “Then they may have a reason to look into you.” 

Lenders typically do not require proof of employment for mortgage renewals, treating them differently from initial applications. The existing lending relationship means borrowers with consistent payment records can often renew without submitting updated income documentation. 

Payment history remains the critical factor. Missed or late payments can trigger lender reviews that complicate renewals, making it essential for unemployed homeowners to maintain mortgage payments even while reducing other expenses. 

“If your payments have been made on time, most lenders will simply offer you a new term without asking for updated employment documents, but it is still important to seek professional advice from a mortgage broker or financial advisor to understand your options and protect your home,” Zlatkin said. 

Limited options 

Brokers note that unemployed clients face limited mobility in the mortgage market. Switching lenders requires full applications with income verification and stress testing, effectively closing this option until employment resumes. 

For clients receiving unfavourable renewal rates but unable to qualify elsewhere, brokers recommend a strategic approach using variable-rate products. 

“If your lender is offering you really terrible rates on your renewal and you can’t go anywhere else because you’re not going to qualify anywhere else, I would highly recommend choosing a variable product with your existing lender,” said Zlatkin. “Then move to a different lender once you find new employment.” 

Variable-rate mortgages carry lower breakage penalties than fixed-rate products, providing flexibility to switch lenders or restructure payments once financial situations stabilise, Zlatkin noted. This strategy allows clients to accept current renewal terms while preserving future options. 

Refinancing remains unavailable during unemployment. Accessing equity, consolidating debt or changing mortgage structures requires full underwriting with provable income—options that become accessible only after returning to work. 

Zlatkin emphasized the importance of timing when communicating with lenders about financial difficulties. 

“If you’re calling the lender before you have that deferral situation, they’re more likely to play ball with you because they want to help you,” Zlatkin says. “They don’t want to foreclose on you.” 

Payment deferral options exist for borrowers mid-term but are not available during renewal periods, when disclosing job loss could jeopardise the renewal itself. 

Mortgage professionals recommend clients tap emergency savings to maintain payments and seek professional guidance to navigate individual circumstances during unemployment periods. 

Source CMP
By Jonalyn Cueto