At the end of your mortgage term you will need to make a decision regarding what to do with the outstanding mortgage balance. You may choose to: (a) pay out the balance if you have the money, (b) renew the balance, roll into another mortgage term, and begin making modified payments as per the renewal offer of your current lender, or (c) shop around for a new mortgage with a new lender.
Paying out your mortgage at renewal time is not always an option for most homeowners, as they don’t have enough cash on hand to do so. However, in cases where an inheritance has been received or a large bonus awarded at work, this is the ideal time to pay off or pay down your mortgage without any fear of incurring a penalty. At renewal time, your mortgage becomes completely open until you lock into a renewal agreement.
Once the mortgage is renewed, your new payment schedule will continue for the agreed upon term, and at the end of that term, the new renewal options will be available. This cycle repeats until the amortization has elapsed and the mortgage balance is paid in full.