Are you nearing the end of your mortgage term and feeling a bit puzzled about your next steps? You’re not alone! It’s decision time: should you renew your mortgage or go for refinancing? These choices might sound like financial jargon, but don’t worry – we’re here to break it down for you in a way that’s easy to understand and apply to your own life.

Mortgage Renewal: The Familiar Path First up, let’s chat about mortgage renewals. Picture this: your mortgage term is wrapping up (typically after one to five years), and it’s time to renew the contract. This doesn’t mean paying off the whole shebang – it’s just re-upping for another term.

Your lender will toss an offer your way with new terms and an interest rate. It’s like renewing a lease, but for your mortgage. You can say “Yep, looks good to me!” and renew, or you can put on your negotiation hat and try to snag a better deal. Or hey, why not shop around a bit? Other lenders might be eager to woo you with sweeter terms.

Refinancing: The Road to Flexibility Now, let’s explore refinancing. This route is like deciding to take a different path in your mortgage journey. Maybe you want a better interest rate, or perhaps you need to tap into your home equity to fund a major expense, like a renovation project or consolidating debts.

Refinancing means you’re changing up your mortgage either before the term is up or at renewal. It could involve switching to a new lender, borrowing more cash, or changing the type of mortgage you have. But remember, great power comes with great responsibility (and sometimes fees, like penalties for breaking your current mortgage).

The Crossroads: Comparing Renewal and Refinancing The biggest difference between these two is change. Renewing often means keeping your mortgage balance and remaining amortization the same, while refinancing is about making shifts in your mortgage setup. Renewals are usually straightforward and cost-effective, but refinancing offers more drastic changes, albeit with potential costs like penalties and fees.

Dollars and Sense: What Makes Financial Sense for You? Choosing between renewal and refinancing hinges on your personal and financial goals. Want to pay off your mortgage faster? A renewal with a shorter term could be your best option. Looking to lower monthly payments or consolidate debt? Refinancing might be the way to go.

Consider the market too. If interest rates are playing in your favour, refinancing could save you money in the long run, even with upfront costs. And let’s not forget about life’s twists and turns – a change in income or financial status can also influence your decision.

Decision Time: Which Road to Take? It all boils down to what you want out of your mortgage. Keep an eye on your long-term financial goals, the market’s heartbeat, and any changes in your personal life. And remember, there’s no harm in chatting with a mortgage advisor or financial expert. They can help you weigh the pros and cons based on your unique situation.

Whether you stick to the familiar path of renewal or choose the adventure of refinancing, make sure it aligns with your financial dreams and realities. Your mortgage journey is yours to shape, so choose the path that brings you closer to your goals.

A tip we often share with clients when they are coming up for renewal and have paying off their mortgage soon as a goal… Refinance to a longer amortization to lower your minimum monthly payment. Then increase your payment to match the amortization you had remaining. This allows you to have the relief of a lower payment if needed, while still achieving your goal of paying off your mortgage sooner.

Let’s connect and come up with a plan together!