There are many misconceptions when it comes to the knowledge surrounding mortgage renewal and mortgage refinance. A renewal is when the lender you're currently with presents to you a new home mortgage at the end of your existing term. If you accept this offer, there are no fees involved. Refinancing is when you are a pre-existing mortgage holder, and you want to switch to a new lender. Refinancing will have fees required at closing that can be costly as well as other fees that are often involved when securing a new loan.

When should I renew?

Mortgage renewal is when you agree to another term with your existing lender. Sometimes lenders will offer you a good deal because they are sure that if they don’t, you will move to another lender. Mortgage rates are always changing so if you aren’t happy with your current mortgage, it is always worth checking to see what other options you have with other lenders. When it’s time to renew your mortgage, this can also be a good time for those who have had their mortgage for a while and are interested in locking in at a lower rate.

Mortgage Refinance

Mortgage refinancing is different than a mortgage renewal. A refinance means that you have already had a mortgage with a previous lender but you’re looking to switch lenders in order to get a better rate, or because there is some other factor affecting your circumstance. Refinancing does not mean carrying on with your existing lender. Refinancing means you have an existing mortgage, and you want another one. Mortgage rates change constantly so you are sometimes able to get an offer at a lower rate by getting a new loan from your existing lender. When you refinance your mortgage, this can also require closing fees as well as other fees that are attached to a new mortgage. Mortgage refinance can also be accompanied by new interest rates.

Refinancing Benefits

Refinancing your mortgage comes with many benefits. Interest rates are constantly changing which can mean you may be able to save money by finding a lower interest rate. When you refinance you can also avoid unpleasant fees and charges. Refinancing can often mean being able to improve your credit score by paying off some of the debt you may have currently.

Which option is best for you?

Both renewal and refinance have their pros and cons depending on your unique circumstances. If you want to save money, consider the benefits of borrowing from a lender that offers you better rates and terms. When you refinance it will usually come with some fees and charges which will add up and increase the cost of borrowing. Mortgage renewal can also be worth considering depending on what’s being offered. Mortgage rates change often which means your lender could offer you a better interest rate which could be worth considering. A mortgage renewal will also be worthwhile if the lender you are currently with doesn’t include any fees or charges, and offers a lower interest rate than all the other lenders you have investigated.

Whether you’re refinancing or renewing both options can be a good decision if you keep a few things in mind. Mortgage refinance often equals fees and charges whereas mortgage renewal does not. Refinancing can be worth while depending on the rate, but mortgage renewals can often come with better rates so it’s worth looking into both options. Refinancing can save you money if you can secure a lower interest-rate than the one you currently have. Refinancing is a good option if you are wanting to consolidate debt, wanting to do renovations, secure a second mortgage, or have a large expense at hand. Feel free to give Laurence a call today to investigate the many options that are currently available to you.