When your current mortgage term comes to an end, there are basically 3 options for what you can choose to do as you proceed with your mortgage. Renew, Switch, or Refinance. Each options has its own benefit depending on your personal financial goals and situations.
1. Renew your existing Mortgage
With a mortgage renewal, you will stay with the same lender and continue onwards with the same amortization length you started with. Your lender will present you with a list of available rates and term lengths you can take for your renewal.
When reviewing rates be sure to ask yourself:
What are my dreams, goals and plans for the coming years?
Consider where you might be within each timeframe of the rates they are providing. Are you happy staying put for another 5 years, or will you be looking at selling and moving within the next couple of years? This will be the deciding factor on the rate you and term length you choose.
Note: If you have already completed a 5 year term with a lender, the penalty will be lower for you if you have to break the next 5 year fixed rate mortgage early.
2. Mortgage Switch:
A mortgage Switch is when you want to switch your existing mortgage to a different lender with a more desirable rate than the one you are currently with.
You will not change the length or amount of your mortgage. You will be keeping all the original terms, only with a better rate.
3. Mortgage Refinance:
Refinancing your mortgage can be thought of as restarting your mortgage. There are a variety of benefits achieved by refinancing your mortgage.
Keeping your current balance but going on a longer term will lower your monthly payments
You can refinance to lower your debts by grouping all your various bills & payments into one lower interest payment
Most people refinance to access the equity they have built in their home for whatever reason they may need it: Investment opportunities, purchasing a second property, renovations, unexpected costs, etc.
Coming out of the pandemic, many people purchased toys and things that they could use for enjoyment during the times stuck around home. Many clients of mine have found large benefit in grouping all these payments together and lowering their monthly cost on the newly obtained toys & vehicle.