For many people, refinancing their mortgage is another way of saying 'renewal'. Their bank or lender calls them up and says, "It's time to renew your mortgage." They have a short discussion on the phone, which results in the signing of new papers for another term, without too much thought.

For other people, refinancing is a necessity because they need some extra money for the house. They want to make use of some of the capital that has built up in their property. This means that they need to negotiate for a new mortgage - at a new loan amount.

And then again, it could be that your interest rate right now is too high, and you want to refinance to get that rate down. In a volatile interest rate market, it can be to your advantage to pay those penalty clauses and get yourself a better interest rate.