Canada's 2026 Mortgage Renewal Wave: How to Keep Investing in XEQT When Payments Jump

My mortgage renewal letter showed up on a random Tuesday in February. I knew it was coming – I had been tracking the date for months – but seeing the actual number still felt like a punch to the gut.

My old rate: 1.89%. My new rate: 4.69%. On a $450,000 remaining balance, that translated to an extra $780 per month just to keep the roof over my family’s head.

My first instinct? Log into Wealthsimple and pause my automatic XEQT purchases. The math seemed obvious – I needed that cash flow somewhere, and the mortgage payment was non-negotiable. Surely I could just “take a break” from investing for a couple of years until things stabilized.

That instinct was wrong. And if you are one of the millions of Canadians staring down a mortgage renewal right now, I want to save you from making the same mistake I nearly made.

1. The Mortgage Renewal Wave Hitting Canada Right Now

Let us talk about the scale of what is happening, because this is not just a “me” problem. This is arguably the single largest financial shock hitting Canadian households since the 2008 recession – and unlike 2008, it is not a market crash. It is a slow-motion payment increase rolling through millions of homes.

• Approximately $900 billion in Canadian mortgages are up for renewal in 2025-2026
• Most were locked in during 2020-2021, when 5-year fixed rates hovered around 1.5% to 2.5%
• Today’s renewal rates sit around 4% to 5%+, depending on your term and lender
• For a typical Canadian mortgage ($400,000-$600,000 in major cities), this means payment increases of $500 to $1,500+ per month

Here is what that looks like in real scenarios:

Payments assume 25-year amortization remaining, monthly payment frequency.

That last row is what many homeowners in the Greater Toronto Area, Vancouver, and other major markets are facing. An extra thousand-plus dollars per month is not a rounding error. It is the exact amount many people were putting into their TFSA or RRSP every month.

This is why I hear the same question constantly: “Should I stop investing in XEQT until my mortgage situation stabilizes?”

2. “Should I Stop Investing in XEQT to Pay My Mortgage?”

I understand the temptation. I felt it myself. When your housing costs jump by $600-$1,000 per month, every other financial goal feels like a luxury. The emotional logic goes like this:

• My mortgage payment is now huge and non-negotiable
• I cannot afford to contribute what I used to
• Therefore, I should stop investing entirely and put everything toward my mortgage
• Once the mortgage is under control (or rates come down), I will start investing again

This feels responsible. Your parents might encourage it. Your mortgage broker almost certainly will. But pausing your investments entirely – especially in a TFSA – is one of those decisions that feels right in the moment and costs you dearly over a 10-20 year horizon.

You are not just losing the money you do not invest. You are losing all the future growth on that money. If you stop contributing $500/month to XEQT for three years, you are not just missing out on $18,000 in contributions. At an 8% average annual return, that $18,000 would have grown to roughly $58,000 over 20 years. That is $40,000 in compound growth – gone, because you pressed pause.

I wrote a detailed breakdown of this in my post on the cost of waiting to invest. The numbers are sobering.

The other problem is behavioral. Once you stop investing, it is incredibly hard to start again. Life fills in the gaps. The “temporary” pause becomes six months, then a year, then “I’ll start again when I get a raise.” I have seen it happen to too many people.

3. The Math: Mortgage Paydown vs. XEQT Investing

Okay, but what about the argument that paying down your mortgage faster is a guaranteed return? It is a fair point, and I have a dedicated deep-dive on XEQT vs mortgage paydown if you want the full breakdown. Here is the summary.

When you make an extra payment on your mortgage, you are effectively earning a “return” equal to your mortgage interest rate. A 4.5% mortgage means every extra dollar you put toward principal saves you 4.5% in interest – guaranteed, risk-free.

XEQT has historically returned approximately 8-9% annually over long periods. But that return is not guaranteed, and it comes with volatility. So the question becomes: is the expected premium from XEQT (roughly 3-4% above your mortgage rate) worth the risk?

The Tax Factor Changes Everything

Here is where most “mortgage vs. investing” calculators get it wrong. The advantage of investing depends heavily on which account type you are using.

RRSP returns are tax-deferred, not tax-free – you will pay tax on withdrawal. Non-registered returns assume a mix of capital gains (50% inclusion rate) and dividends. These are simplified estimates.

Key takeaways from this table:

1. TFSA investing wins clearly in almost every scenario. All growth inside a TFSA is completely tax-free, so XEQT’s full expected return competes against your mortgage rate. Even at a 5% mortgage rate, the expected advantage is roughly 3 percentage points annually.

2. RRSP investing still favours XEQT, but the margin is narrower. You will eventually pay tax on withdrawals, which reduces the effective advantage.

3. Non-registered accounts are the closest call. At high marginal tax rates and high mortgage rates, the after-tax investing advantage shrinks to near zero. This is where mortgage paydown starts to make more sense.

4. Mortgage paydown is a guaranteed return. XEQT is not. The 8% expected return is a long-term average. In any given year, XEQT could be up 20% or down 15%.

What the Numbers Look Like Over 15 Years

Let us run a concrete example. Say you have an extra $500/month after your mortgage renewal and you are deciding between putting it toward your mortgage principal or investing it in XEQT inside your TFSA.

Even at a conservative 6% return, the TFSA investment strategy comes out significantly ahead. And unlike the mortgage paydown savings (which are real but invisible), the TFSA investment gives you a tangible, liquid pool of wealth.

That said, there is a psychological value to being mortgage-free that spreadsheets cannot capture. If owning your home outright lets you sleep at night, that has value too.

4. A Framework for Deciding: When to Prioritize Mortgage vs. XEQT

The “right” answer depends on your personal situation. Here is a decision framework I use:

Prioritize XEQT Investing When:

• Your mortgage rate is below 5%. The expected return premium from XEQT is wide enough to justify the risk.
• You have TFSA room available. TFSA contribution room is precious and cannot be recovered once a calendar year passes. If you skip a year of contributions, you lose a year of tax-free compounding. You get the room back eventually, but you cannot get back the time. (More on this in my TFSA vs RRSP guide.)
• You have a long time horizon (10+ years). The longer you hold XEQT, the more likely you are to realize those 8%+ average returns.
• You already have an emergency fund. You should not be investing if you have zero safety net and a big new mortgage payment.
• You can handle volatility emotionally. If a 20% market drop would cause you to sell, the guaranteed mortgage paydown might serve you better.

Prioritize Mortgage Paydown When:

• Your mortgage rate is above 5-6%. The guaranteed “return” from paying down expensive debt competes seriously with expected equity returns.
• You are investing in a non-registered account at a high tax rate. After tax, the investing advantage may disappear entirely.
• You are close to retirement (under 10 years). Reducing fixed expenses before retirement is valuable, and you have less time to ride out equity volatility.
• You do not have an adequate emergency fund. Building cash reserves may be more important than investing.
• The stress of debt is affecting your quality of life. No spreadsheet advantage is worth chronic anxiety.

The Honest Answer for Most People

For the majority of Canadian homeowners renewing in 2026 with rates in the 4-5% range, the optimal strategy is some version of both: keep investing in XEQT (even at reduced amounts) while making your regular mortgage payments.

5. Five Strategies to Keep Investing During Higher Mortgage Payments

Here are five practical approaches to keep your XEQT investing on track when cash flow is squeezed.

Strategy 1: Reduce Your Contribution Amount (But Do Not Stop)

This is the simplest and most important piece of advice in this entire post. Contributing $100/month to XEQT is infinitely better than contributing $0/month.

If you were investing $500/month before your renewal and your payments went up by $600, you do not need to stop entirely. Drop to $200/month. Or $100. You keep the investing habit alive, you keep dollar-cost averaging, and you maintain the behavioral momentum that is so hard to restart once you stop.

To figure out how much you should invest monthly after your renewal, start with your new budget reality and work backwards.

Strategy 2: Redirect Windfalls to Your Mortgage, Keep Regular Contributions for XEQT

This is my favourite approach:

• Regular paycheque contributions continue going to XEQT (even if reduced)
• Irregular windfalls go toward extra mortgage payments – tax refunds, work bonuses, cash gifts, overtime pay, side hustle income

Your mortgage benefits from lump-sum payments (which are extremely effective at reducing interest), while your investment portfolio benefits from consistent, automated contributions. You are attacking the problem from both sides.

Strategy 3: Extend Your Amortization to Free Up Cash Flow

Most lenders will allow you to extend your amortization period at renewal. If you originally had a 25-year amortization and you have been paying for 5 years, you could potentially re-extend back to 25 or even 30 years.

Yes, you pay more total interest with a longer amortization. But if that extra $363-$572 per month goes into XEQT inside a TFSA earning 8%, you more than make up for the extra mortgage interest. You are essentially borrowing at 4.69% to invest at 8% – tax-free.

Important caveat: This only makes sense if you actually invest the freed-up cash flow. If it gets absorbed into lifestyle spending, you are worse off. Automate the XEQT purchase so it leaves your account before you can spend it.

Strategy 4: Review Your Spending for Strategic Cuts

I know – “cut your spending” is the most tired advice in personal finance. But I am not talking about giving up coffee. I am talking about surgical cuts that free up meaningful cash without affecting your quality of life.

When my mortgage renewed, I did a line-by-line review of our recurring expenses. Here is what I found:

• Two streaming services we barely used: $32/month saved
• Gym membership I had not used in 4 months (switched to running outside): $55/month saved
• Car insurance (re-quoted and switched providers): $45/month saved
• Cell phone plan (negotiated a loyalty discount): $20/month saved
• Meal kit subscription (replaced with simple meal planning): $120/month saved

Total: $272/month freed up, with minimal lifestyle impact. That went straight into my XEQT recurring buy. Over 20 years at 8% returns, that adds up to roughly $160,000.

Strategy 5: The “Split the Difference” Approach

If the math from Section 3 gives you analysis paralysis, try this: split whatever extra cash you have 50/50 between extra mortgage payments and XEQT.

You will not perfectly optimize either goal. But you will make meaningful progress on both. This is what I ended up doing after my renewal. It is not the mathematically optimal solution, but it is the solution I actually stuck with – and that matters more than spreadsheet perfection.

6. What NOT to Do (Common Mistakes During Payment Shock)

The renewal wave is creating panic-driven decisions that will cost people far more than the rate increase itself. Here are the biggest mistakes I see:

Mistake 1: Selling Existing XEQT Holdings to Make Mortgage Payments

This is the nuclear option, and it is almost always wrong. When you sell XEQT to cover cash flow needs, you are locking in your current position (potentially at a loss), triggering capital gains tax in non-registered accounts, and permanently removing capital from the compounding engine.

If your payment increase is so severe that you cannot make it without selling investments, you have a housing affordability problem that needs a different solution – refinancing, extending amortization, downsizing, or renting out a room. Liquidating your portfolio is a last resort.

Mistake 2: Raiding Your TFSA

When you withdraw from your TFSA, you get the contribution room back – but not until January 1 of the following year. If you withdraw $20,000 in March, you cannot re-contribute that $20,000 until next January. You lose 9+ months of tax-free compounding, and many people withdraw “temporarily” and never get around to re-contributing.

Your TFSA is your single most powerful wealth-building tool as a Canadian investor. Reduce contributions if you must. But pulling money out to cover a recurring expense is almost never the right move.

Mistake 3: Abandoning Your Investment Habit Entirely

The hardest part of investing is not picking the right ETF. It is showing up consistently. The habit of regular investing is worth more than any individual contribution.

When you stop – even “temporarily” – you break the habit. Restarting is orders of magnitude harder than reducing. Keep the automatic purchase running, even if you drop it to $25 or $50 per month.

Mistake 4: Panic-Shopping for a Worse Mortgage Deal

Mortgage renewal anxiety makes people vulnerable to bad decisions – breaking their mortgage early and paying massive penalties, switching to variable at the worst time because a broker said rates “are definitely coming down,” or choosing a lender with a lower rate but restrictive prepayment terms.

Take a breath. Shop around. Get quotes from at least three lenders. Understand the terms, not just the rate. A slightly higher rate with generous prepayment privileges (20% annual lump sum + ability to increase payments) may be worth more than a rock-bottom rate with rigid terms.

Mistake 5: Ignoring the Problem Entirely

Some people are so overwhelmed by the renewal that they just sign whatever their current lender offers without shopping around. Your current lender’s first offer is almost never their best offer. Spend a weekend getting quotes – it is one of the highest-paid-per-hour activities you will ever do.

7. The Bank of Canada Factor: Rate Cuts May Be Coming

If you are renewing right now and feeling the sting, there is context that should give you hope.

The Bank of Canada has been on a rate-cutting path since June 2024. The overnight rate has come down from 5.00% at its peak to around 2.75% in early 2026. While fixed mortgage rates do not move in lockstep with the overnight rate (they are more closely tied to bond yields), the general direction has been downward.

I covered the details of this rate cycle in my post on Bank of Canada rate cuts and their impact on XEQT investors. The key takeaway for mortgage holders: if you are renewing into a 5-year fixed rate today, there is a reasonable chance that rates will be lower when you renew again in 2031. That does not help you right now, but it means this payment shock is likely temporary.

Some things to consider:

• A shorter fixed term (2-3 years) lets you renew sooner if rates fall, but at a slightly higher rate today
• A variable rate gives you an immediate benefit when the BoC cuts, but carries risk if cuts stall or reverse
• A 5-year fixed gives you certainty and predictability, which has real value for budgeting your XEQT contributions

My personal choice was a 3-year fixed. I accepted a slightly higher rate than the 5-year option because I believe rates will be lower in 2029. Your risk tolerance may differ. The point is: think strategically about your term choice, because it directly affects how long you will need to adjust your investment strategy.

8. The Long View: This Is Temporary, Your Investments Are Forever

When you are staring at a renewal letter with a number that makes your stomach drop, it is easy to lose perspective.

Your mortgage is a 20-30 year commitment. Your investment portfolio is a 30-50 year project. A few years of higher payments is a small fraction of your total wealth-building timeline.

The people who will be wealthiest in 2040 and 2050 are the ones who kept investing through the uncomfortable periods. Through the 2020 pandemic crash. Through the 2022 rate hikes. Through the 2025-2026 mortgage renewal wave. The portfolio that was fed consistently – even in small amounts – will dramatically outperform the one that was paused and restarted repeatedly.

Consider this scenario for a beginner XEQT investor:

Starting from $0, assuming 8% average annual return.

Even Investor D, who dropped all the way down to $100/month during the tough years, ends up about $15,000 ahead of Investor A who stopped entirely. That is the power of staying in the game.

Your Mortgage Will End. Your Portfolio Should Not.

Here is the thing about mortgages that is easy to forget when you are stressed about payments: they end. Every single payment brings you closer to the day when that $2,500/month obligation disappears forever.

When that day comes – and it will – you want a robust XEQT portfolio waiting for you on the other side. The homeowners who kept investing through the renewal wave will have a massive head start compared to those who stopped and had to rebuild their investment habit from scratch.

My mortgage is the price of keeping a roof over my family’s heads. My XEQT portfolio is the tool that will eventually make work optional. Both matter. But only one of them compounds indefinitely.

The Bottom Line

The 2026 mortgage renewal wave is real and it is painful. If your payments jumped by $500, $800, or $1,200 per month, I feel you. But the worst thing you can do is let this temporary cash flow squeeze derail your long-term wealth plan. Here is your action plan:

1. This week: Run the numbers on your new mortgage payment. Know exactly how much your cash flow has changed.
2. This weekend: Review your budget for strategic cuts. Subscriptions, insurance quotes, negotiable bills. Free up whatever you can.
3. Next payday: Adjust your XEQT auto-buy to a sustainable new amount. Even $50 or $100/month. Do not set it to zero.
4. This month: Talk to your lender about amortization extension if you need more breathing room. Invest the freed-up cash flow.
5. This year: Set up a rule: all windfalls (bonuses, tax refunds, overtime) go toward extra mortgage payments. Regular income feeds your XEQT.
6. Every renewal: Revisit your mortgage term strategy. Rates may be lower next time.

Your mortgage renewal is a five-year problem. Your investment portfolio is a forever asset. Treat them accordingly.