When interest rates experience a significant drop it may be worth refinancing your mortgage before its renewal date, in order to start a new mortgage term at a lower rate. In some cases, refinancing may be used as a solution to get debt under control – by paying out higher interest rate debt – and combining that debt with your lower rate mortgage. There may be a penalty for breaking the mortgage early but it may be worth doing if the savings significantly outweigh the penalty. Refinancing may also involve switching to another lender to get the best rate and terms.