When It Happens: Typically occurs at the end of your current mortgage term (e.g., 1, 3, 5 years).
What It Involves: You renew your mortgage with your current lender, usually at a new interest rate and under potentially different terms.
No Major Changes: The principal remaining and your payment schedule remain largely the same unless you decide to negotiate adjustments.
Why Choose Renewal: If you're happy with your current lender and their renewal offer, or if you don’t need additional funds.
Tip: It’s a good idea to shop around before accepting a renewal offer to ensure you’re getting a competitive rate.
When It Happens: Can occur at any time during your mortgage term or at renewal.
What It Involves: You replace your existing mortgage with a new one, which can be with your current lender or a different one.
Access to Equity: You can borrow additional money by tapping into your home’s equity (up to 80% of its value).
Potential Penalties: Refinancing before your term ends often comes with prepayment penalties.
Why Choose Refinance: If you want to consolidate debt, finance a renovation, or take advantage of lower interest rates.
Feature
Renewal
Refinance
Timing
End of the mortgage term
Any time (but often at renewal)
Lender
Typically with the same lender
Can switch lenders
Access to Equity
No, unless renewing with a different lender
Yes, up to 80% of home’s value
Costs
Usually no fees if staying with the lender
May involve legal fees and penalties if breaking early
Purpose
Continue paying down the mortgage
Adjust payments, consolidate debt, or access funds
Would you like guidance on when it might be best to consider refinancing or negotiating a renewal in today’s market?
