What’s the difference between a Mortgage Renewal vs Mortgage Refinance?

One of the biggest questions in mortgages is what’s the difference between a mortgage renewal vs mortgage refinance?

Here, we’ll review the benefits of each and who each mortgage transaction type is targeted towards.

Mortgage Renewal

A renewal typically happens on the maturity date or ‘renewal date’ of your existing mortgage term, although early renewals are possible too.

The renewal involves a ‘continuation’ of the mortgage balance owed and amortization remaining. There is no equity takeout or option for a longer amortization.

As a Brokerage, what we provide on renewal is:

  • Some of the lowest market rates apply (now and consistently for the life of your mortgage).
  • No fees, legal fees or appraisal costs for most renewals.
  • Consideration of interest rate risk based on the current economic environment and mortgage rate/ term options.
  • A straight forward, fast transaction that can easily save you thousands of dollars.

Who is a mortgage renewal best for?

A mortgage renewal is best suited for those who do not want to change their mortgage structure or household balance sheet too much. The renewal is impactful from a ‘mortgage rate savings’ perspective, but less structurally impactful than a mortgage refinance.

Mortgage Refinance

With a refinance, we are paying off your existing mortgage and ‘restarting’ it. Therefore, more options exist regarding the structure of the new mortgage, including the balance/size and payment terms.

Typically, a refinance is used to lower the interest rate AND pull out home equity at some of the lowest market rates.

Benefits:

  • Access your home’s equity to restructure your debt and create household balance sheet efficiencies.
  • Lower costs of overall interest rates.
  • Use lower rates to reduce mortgage/ debt faster and increase net worth.
  • Free up cash flow for optionality and future growth opportunities.
  • Ensure a resilient household financial situation thats ‘future proofed’.

Who is a mortgage refinance best for?

A mortgage refinance is suited for those looking to consolidate debts and/or to pull out additional funds for home improvements, investing or any other purpose.

Book a meeting with Altrua Financial today for your best mortgage renewal or refinance result!