Renewal Decision Engine
A renewal letter looks like one decision. It's actually five. This compares them honestly: signing as-is at the lender's posted rate, switching lenders to a market rate, refinancing into a readvanceable mortgage (the foundation for tax-deductibility strategies), refinancing + consolidating consumer debt, or refinancing + extending amortization for cash-flow relief. Side by side, over your next term, with closing costs honestly priced in.
Best path on these inputs
Refinance + consolidate consumer debt
Roll high-interest consumer debt into the mortgage at the lower rate. Cash flow improves immediately; total interest drops dramatically.
$12,449 better than signing the renewal letter as-is, over 5 years.
All five paths, side by side
Wealth impact = interest cost saved over horizon, less upfront closing costs. Bolded where best.
| Path | Monthly | Interest | Closing | Wealth impact |
|---|---|---|---|---|
Sign the renewal letter Accept the lender's renewal rate. No closing costs, no shopping. Default outcome. | $2,713.58 | $103,957 | — | (baseline) |
Switch lenders at market rate Same product type, better rate from a different lender. Closing costs apply. | $2,596.12 | $93,857 | $1,500 | +$8,599 |
Refinance to a readvanceable Mortgage + auto-growing HELOC linked to principal paydown. Foundation for Investment Leverage, Cash Damming, and Debt Swap. Slight rate premium vs market. HELOC capacity unlocked over 5 years: about $60,676. This is the runway for layered tax-deductibility strategies. | $2,642.80 | $97,892 | $1,500 | +$4,565 |
Refinance + consolidate consumer debt Roll high-interest consumer debt into the mortgage at the lower rate. Cash flow improves immediately; total interest drops dramatically. | $2,748.83 | $99,378 | $1,500 | +$12,449 |
Refinance + extend amortization for cash flow Lower monthly payment by stretching the amortization. Buys cash-flow relief at the cost of higher lifetime interest. Useful when income is constrained or when redirecting freed cash flow into a higher-yield use (e.g. paying down higher-interest debt or investing). | $2,215.18 | $96,738 | $1,500 | +$5,719 |
What renewal letters don't tell you
Lenders don't lead with their best rate at renewal. The math above usually shows that signing as-is leaves real money on the table. The readvanceable path almost never wins on raw interest cost over a single term, but it's the foundation for every layered tax-deductibility strategy this site covers, and that optionality often outweighs the small rate premium over a 10-15 year horizon.
Estimate, not a quote. Real lender penalties on early breakage (mid-term refinance) and product-specific differences in prepayment privileges can shift the math meaningfully. If you're renewing in the next 90 days, this is the conversation worth having.
How to read the result
A few thresholds the model can't flag on its own.
- If “switch lenders” comes up best, the IRD method on the new product matters more than the rate spread. Switching lenders means breaking the existing term, which triggers the IRD penalty on the old mortgage. If the new lender uses posted-rate IRD, you've traded one harsh penalty for another. The model prices today's break, not the next one. Pin down the new product's IRD method before signing.
- If you're more than 90 days from renewal, “sign as-is” is rarely the answer. At 90+ days out, you have time to shop, broker-test, and switch lenders without taking IRD on a mid-term break. Once you're inside 60 days, switching gets time-pressured and you lose leverage. If “sign as-is” ranks first on your file, double-check the rate spread against current market and the prepayment privileges on the renewal letter.
- If readvanceable refi is within 5% of the top path, optionality usually tips it. The model measures the readvanceable path in raw interest cost. It can't price the optionality the structure unlocks ( Cash Damming, Investment Leverage, Debt Swap). On a 10-15 year horizon, a household that ends up using even one of those plays usually finds the readvanceable was the most valuable renewal decision they made. A small delta in raw interest cost is usually less than the optionality value.
- If “consolidate consumer debt” ranks first, the model can't price the behavioral risk. The consolidation path's math is straightforward: blended-rate drop on the consumer debt over the run. What the model can't see is what created the consumer debt in the first place. If the spending pattern that built the debt is still active, consolidating then re-running the cards leaves you with the bigger mortgage AND the same consumer debt on top. The strategy works only if the spending side gets addressed at the same time.
What this calculator misses
The readvanceable path's wealth impact is conservatively measured in raw interest cost. It almost never wins on that alone. Its real value is optionality: it unlocks Cash Damming, Investment Leverage, Debt Swap, and the rest. Over a 10-15 year horizon, a household that ends up using even one of those strategies usually finds the readvanceable was the most valuable renewal decision they ever made. The optionality math depends on file specifics and belongs in a strategy call.
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