Mortgage renewal when you're retired or on a pension
CPP, OAS, workplace pensions and RRIF withdrawals all count as qualifying income. Because pension income is often non-taxable or taxed at a lower rate, some lenders will gross it up by 10–25%. If you stay with your existing lender, no income re-qualification is required at all.
What makes this different
- Income has usually dropped materially since the original mortgage was written.
- Some lenders won't amortize past age 75; others will go to 80 or beyond.
- GDS/TDS ratios can look tight even when there's massive equity in the home.
- Reverse mortgage sales pressure spikes around renewal — often not the right first move.
How to approach your renewal
Renew with your current lender first — no re-qualification, no stress test, no income review. Take their retention rate as your baseline.
If you want to shop, target lenders that gross up pension income: Scotiabank, TD, First National, MCAP and most credit unions. A broker knows which ones do and which ones don't.
Consider extending amortization back out to 25–30 years to lower your payment. On a $400K balance, moving from 15 years to 25 years drops the payment by roughly $900/month — cash flow that matters far more in retirement than paying the mortgage off two years faster.
Reverse mortgages (CHIP, Equitable Bank Flex) are a last resort, not a first option. Rates are ~2% higher than a conventional renewal. Only use if you truly cannot qualify for a standard renewal.
FAQ
No. Under Canadian banking practice, your existing lender must offer you a renewal at maturity — they cannot force you to re-qualify or refuse based on age or income change.
Usually no. Withdrawing from an RRSP triggers full-marginal tax. Non-registered funds earning less than your mortgage rate after tax is a different math — a fee-only planner can run the numbers for your specific case.
No. A HELOC requires income qualification and monthly interest payments. A reverse mortgage has no payments and no income test, but interest compounds against your equity — typically 8–10% currently.
Related situations
Related questions
Terms used on this page
Related calculators
Jay Klair, Mortgage Agent Level 2 (M09000869) — Real Mortgage Associates, FSRA #10464, part of the DLGC Group of Companies · 5675 Whittle Rd, Suite 100, Mississauga, ON L4Z 3P8