Mortgage Refinance vs Renewal
When it comes to mortgages, it can be confusing when trying to decide whether to refinance or renew. Both are excellent options for homeowners looking to lower their monthly payment and potentially save money in the long run.
Mortgage refinance is an option that allows a homeowner to take out a new loan with different terms and conditions than the original loan. This means that the homeowner can choose a new lender, different interest rate, and potentially new terms such as length of repayment or type of mortgage product. Refinancing is often done to take advantage of lower interest rates or get better terms on their existing loan.
Mortgage renewal, on the other hand, is the process of renewing an existing loan with the same lender. This means that the terms and conditions of the original loan remain in place, but the homeowner may be able to take advantage of a lower interest rate if one is available. Renewal is often done to avoid having to go through the process of refinancing, which can sometimes be long and complicated.
Should you renew or refinance your mortgage?
The answer to this question depends on a few different things. First, you need to think about your current financial situation. If you’re doing well financially and you’re happy with your current mortgage rate, then renewing it may be the best option for you. Renewing is usually an easier option, because you won’t have to go through the mortgage approval process again.
However, if you are not happy with your current mortgage rate, or if you want to save money on your monthly payments, then refinancing your mortgage may be a better option for you. Refinancing usually requires going through the Mortgage Qualification Process again, but it may be worth it if you can get a lower interest rate.
Ultimately, the decision of whether to renew or refinance your mortgage comes down to your personal financial situation and what’s best for you.
Benefits Of Renewing Your Mortgage
If you decide to renew your mortgage, you can usually do it with just one phone call. This is the easiest and quickest way to renew your mortgage.
If interest rates have gone up since you got your Mortgage, renewing will allow you to keep your current, lower interest rate.
When you renew your mortgage, you usually don’t have to go through the Mortgage Qualification Process again. This can save you time and hassle.
When you renew your mortgage, you can usually choose from a variety of Mortgage Terms. This flexibility can be helpful if your financial situation has changed since you got your Mortgage.
Renewing your mortgage is generally an easier and faster process than refinancing your mortgage.
Benefits Of Refinancing Your Mortgage
This is usually the main reason why people decide to refinance their mortgage. If you can get a lower interest rate, you’ll save money on your monthly payments and on the total amount of interest you pay over the life of your mortgage.
When you refinance your mortgage, you may be able to choose different mortgage terms. For example, you may be able to switch from a variable-rate mortgage to a fixed-rate mortgage. Or, you may be able to change the length of your mortgage term.
If you have other debts, such as a line of credit or a car loan, you may be able to consolidate those debts into your mortgage. This can simplify your financial life by having only one monthly payment. And, it may save you money on interest charges.
When you refinance your mortgage, you may be able to “cash out” some of your home equity. This means you’ll receive a lump sum of cash that you can use for any purpose. You may, for example, use the cash to make home renovations or repairs. Just keep in mind that if you take cash out of your home equity, you’ll have to pay interest on that cash. And, you may end up with a larger mortgage than you had before.
If you can get a lower interest rate when you refinance, you’ll save money on your monthly payments. You may also be able to save money by changing the terms of your mortgage. For example, if you switch from a 30-year mortgage to a 15-year mortgage, your monthly payments will be higher. But, you’ll pay off your mortgage faster and you’ll pay less interest overall.
If you refinance to a shorter-term mortgage, such as a 15-year mortgage, you’ll likely have higher monthly payments. But, you’ll also pay off your mortgage faster and you’ll pay less interest overall. If you have the financial ability to make higher monthly payments, refinancing to a shorter-term mortgage can be a good way to save money on interest charges.
Mortgage refinancing can be used as a tool for debt consolidation. This means that you would be taking out a new mortgage that is larger than your current one and using the extra money to pay off other debts, such as lines of credit or credit cards. Mortgage refinancing can be a good way to consolidate your debts if you can get a lower interest rate on your new mortgage than you are currently paying on your other debts.
Mortgage refinancing can also be used as a way to finance home renovations. If you have equity in your home, you can use it to take out a cash-out refinance loan. This type of loan gives you a lump sum of cash that you can use for any purpose, including home renovations.
Renewing vs refinancing your mortgage
When you renew your mortgage, you generally keep the same interest rate, term and conditions as your current mortgage. Mortgage renewal is simply a new agreement between you and your lender to continue paying off your existing mortgage.
When you refinance your mortgage, on the other hand, you may be able to get a new interest rate, term or both. Mortgage refinancing usually involves taking out a new mortgage that is larger than your current one and using the extra money to pay off your old mortgage. This process can also be used to consolidate your debts or finance home renovations.
So, which option is right for you? It depends on your personal situation. If you’re happy with your current mortgage and don’t want to make any changes, renewing may be the best option. But, if you’re looking to save money on your monthly payments or pay off your mortgage faster, refinancing may be the way to go.
Talk to your lender about your options and see what makes the most sense for you.
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