Being a homeowner is a great accomplishment that can benefit your life and financial situation, but it doesn’t come without challenges. Interest rates fluctuate over time and right now, you may be faced with renewing your mortgage at a higher rate than you were anticipating. If that’s the case, know that you’re not alone—and that this challenge isn’t uncommon or unmanageable. Our financial advisors and mortgage specialists are here to help you make the best decision for your family, ensuring that you have the expert guidance and peace of mind you deserve.
If you’re concerned about renewing your mortgage at a higher rate or are wondering if refinancing your mortgage is the right plan, let’s talk—an Interior Savings advisor would be glad to discuss your financial needs and goals in order to recommend the best mortgage option.
Renew vs refinance
First, a quick refresher on some key terms. Renewing your mortgage refers to signing an updated contract with your mortgage lender at the end of a specified period of time. Simply put, it’s an extension of a contract you’ve already signed, though the rate itself is likely to change. For example: if you signed a five year contract at 3.9% and those five years are almost up, you’ll have to renew your mortgage with your lender. If your lender is currently offering 5.5% for another five year term, your mortgage payment will increase due to the higher interest rate. When you renew your mortgage other years, you may see a decrease in interest rates—this would lower your mortgage payments. You can only renew your mortgage at the end of a term, and there are no fees involved.
Refinancing your mortgage is when you break your existing mortgage contract in order to change the terms (for example, the interest rate and/or amortization). This is a much more significant change and may involve financial penalties as a result of breaking your existing contract. It is typically done in response to a specific need (wanting lower monthly mortgage payments, borrowing a lump sum of money from the equity in your home, adding or removing someone from the title of your home, moving to a new house, etc). Please note that changing your mortgage may require undergoing a stress test to meet new requirements.
Which option is right for me?
Every individual or family has a unique financial situation with different needs, goals, income levels and responsibilities. The decision to renew your mortgage at the end of a contract term or refinance your mortgage should be based on personal factors and expert advice. For example, your advisor may consider the equity you have in your home, your cash flow needs, your income level and budget, your goals and other elements of your financial plan.
Our mortgage experts can help
Don’t let higher interest rates or mortgage stress get you down—fluctuations are normal and to be expected, and there are many ways to effectively manage this short-term challenge. Focus on the equity you’ve built and the wonderful home you’re able to enjoy, and our team can help you find a mortgage solution that reflects your needs and budget.
If you have questions about your mortgage or are looking for advice, Interior Savings is here to help. Please contact us to speak with a mortgage specialist on our team—we’d be glad to hear from you.