Refinancing or Renewal

Mortgage Refinance or Renewal, which one?

Refinancing your mortgage

You might consider refinancing for a number of reasons; however, the most common reasons are:

1. Lowering your monthly payment to improve cash flow or free up money for your savings fund
2. Consolidation of a high-consumer debt, such as credit cards, car loans or other personal loans
3. Renovating your home while taking advantage of possible federal home renovation tax credits
4. To setup a HELOC, which allows you to withdraw funds as needed, when needed. A HELOC can be established for a one-time cost and accessed many times without the need to re-qualify, if you have kept up-to-date on your payments.

Renewing your mortgage

When an existing mortgage is about to expire and you’re happy with the current terms and conditions then it is time to renew your mortgage contract (otherwise it is called a refinance). Most Canadian banks will send the mortgage renewal documents and notice in the mail usually a couple of months prior to the term expiring. These documents and notices will include the contract extension terms and interest rates available to you for renewal purposes.

Usually your existing lender will offer your rates slightly less than competitive rates hoping you will simply accept their renewal offer without doing too much research into what the competition is willing to offer.