It can an get stressful when a lender does not renew your mortgage and you may feel helpless as you figure out what to do. Fortunately, there are a few steps to keep your home still. This blog post will cover some strategies for protecting your home when your lender denies your mortgage renewal.
What Does Mortgage Renewal Imply?
When you obtain a mortgage from a lender, your contract is valid for a set period. It is known as the mortgage term, which might last from a few months to five years or more.
Unless you fully pay the sum, you need to renew your mortgage before each term ends. To fully repay your mortgage, you’ll most likely need multiple terms.
Reasons Your Mortgage Renewal Could Be Rejected
Your mortgage is typically divided into several “terms.” At the end of each term, you will need to renew your mortgage with your lender to continue making payments. Your mortgage renewal may be rejected if:
- Your Current Lender Rejects Your Application: This can happen if your current lender doesn’t feel comfortable lending to you or if they don’t think the loan is in their best interest.
- A New Lender Rejects You: A new lender could require additional documents and information, so be sure to have all necessary paperwork ready when applying.
- You Don’t Meet the Requirements: You may not meet specific requirements for the loan, such as having a minimum amount of your home equity or a good credit score.
- Your Credit Score Has Significantly Dropped: If you’ve been late on payments or have gone into foreclosure, your credit score could have dropped, resulting in a rejected mortgage renewal.
What happens if I Don’t Renew my Mortgage?
The mortgage procedure in Canada may be difficult to negotiate for home buyers since the loan you take out is only meant to get you part of the way toward completing the home purchase.
Renewal should not be an issue if you complete your payments on time each month, retain employment and income status, and keep your credit score consistent. The bank is required to give you a renewal statement at least 21 days before your term expires.
This statement will include information such as the balance at renewal, the renewal loan’s interest rate, the renewal loan period, and any related costs.
Options to Take If Your Mortgage Renewal Is Rejected
If you find yourself in a situation where a lender has denied you a mortgage renewal, here’s what you can do:
Get a B lender
A B lender is a non-bank lender that offers loans to people who don’t meet traditional lending requirements.
B lenders are more likely to give money to people with lower credit scores or more debt. They don’t operate with the same restraints of a bank and can be more flexible to work with.
Negotiate a Better Interest Rate.
Make a deal with your present lender. You may be eligible for a lower interest rate than the one indicated in your renewal letter. Inform your lender about any other financial institutions or mortgage brokers’ offers.
You may be required to give evidence of the offers you receive and ensure this information is readily available. If you do nothing, your mortgage term may be automatically renewed.
It means you may not receive the best interest rate and terms. If your lender intends to renew your mortgage automatically, the renewal statement will specify so.
Refinance Your Mortgage
When you refinance, it will allow a borrower to get a better interest rate on their mortgage. To refinance means you replace the mortgage you have with a new mortgage that has more favorable terms. Whether or not you should refinance depends how much money refinancing will save you.
To refinance, you can either apply for a new loan with the same lender or research other lenders willing to approve you with a better rate.
How will Lend Today help you?
You can find the perfect solution for your mortgage needs with Lend Today Home Equity Loans. We have a team of experienced loan professionals to help you throughout the process, inform you of your options and steer you toward the right financial path. Contact us today and see how we can help you approve your mortgage renewal.
We look forward to helping you!
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