Why Is My Mortgage Payment Going Up in Canada?

If your mortgage payment went up, the cause is almost always one of the reasons below. Your lender can tell you which one: ask for a breakdown of the payment into principal and interest, property tax and insurance, and compare it with the last one. Each reason here is a short summary with a link to the page that covers it in full; the mortgage renewal and management hub lists the rest.

1. Your variable rate went up

On an adjustable-rate mortgage, the payment changes when your lender’s prime rate changes, which usually follows a Bank of Canada rate decision. On a variable rate with a fixed payment, the payment stays the same at first and more of it goes to interest; fixed vs variable mortgages explains both kinds, and the prime rate page shows where prime is now.

2. A fixed-payment variable mortgage reached its trigger rate

At the trigger rate the payment only covers interest, and none of it pays down the principal. Once the trigger rate is reached, the lender may require you to increase your payments, make extra payments to cover the excess interest, or switch to a fixed rate. The trigger rate explained shows how to work out yours.

3. Your balance reached the trigger point

The trigger point is different: it's reached when your balance grows past the lender's limit relative to your home's purchase value, and then you must adjust your payments, make a prepayment or pay off the balance. Your options at that stage, and what each costs, are on what to do at the trigger point.

4. Your mortgage renewed at a higher rate

A fixed payment lasts only for the term; at renewal the payment is recalculated at the new rate on the remaining balance and amortization. If you locked in when rates were lower, the jump can be large; the payment shock calculator guide estimates it, and the mortgage renewal guide covers comparing lenders before you sign.

5. Your property tax went up

If your lender collects property tax with your payment and pays the municipality for you, a higher tax bill raises the total payment, and a shortfall in the tax account from the year before can raise it again until it is made up. Paying property tax through your mortgage explains how the tax account works and how to check it.

6. Your payment frequency changed

A regular (non-accelerated) biweekly payment is your annual payments divided by 26, so it costs the same over a year as monthly payments. An accelerated biweekly payment is half the monthly payment every two weeks, which adds about one extra monthly payment a year; switching from regular to accelerated raises each payment. The payment frequency guide compares every schedule.

7. A deferral or skipped payment ended

When a payment deferral or skip-a-payment period ends, regular payments resume, and the lender may raise them to cover the interest added to the balance in the meantime. Mortgage payment deferral covers what a deferral costs and how payments are reset.

8. A creditor insurance premium was added or changed

If you bought mortgage life, disability or job-loss coverage through your lender, its premium is often collected with the mortgage payment, so a new policy or a premium change shows up there. Mortgage life insurance vs term life compares lender coverage with a policy you own.

What you can do about a higher payment

Related pages

• Average mortgage payment in Canada
• Mortgage renewal calculator
• Should I break my mortgage for a lower rate?