For many people, qualifying for a mortgage is far stressful. Just because you have a mortgage it doesn’t mean that you can renew your mortgage as simple as that. Getting your mortgage renewal can also be more stressful than you think it is. It doesn’t give a 100% guarantee for your renewal approval.
What is a mortgage renewal process?
A mortgage renewal is when your current mortgage terms meet their maturity date, and so you need to sign for a new term to pay off your outstanding balances. You have the opportunity to renegotiate the terms of your mortgage contract including your mortgage interest rate, the long period of your next terms, and your lenders as well.
When your mortgage term is about to end, keep an eye on your mailbox or you will receive an email letter from your lender telling you your mortgage is up for renewal. The mail or email contains the renewal form that you can sign and send back and information that includes your mortgage as normal statements such as outstanding balance, payment frequency, etc.
Why your mortgage renewal is denied
Your mortgage renewal could be denied for some reason; either by your current lender or by a new lender. The following information will explain why your renewal application might be denied.
#1 You are denied by your current lender
Generally, you do not need to re-qualify for a mortgage if you decide to stay with your current lender. Meaning, you do not need to submit a new application process all over again. As long as you maintained a solid payment history, and your financial situation does not change, you will not be denied for mortgage renewal.
However, if your financial circumstances have changed like you have lost your job, your income has been reduced, or you find a job with a smaller income, you are more likely to lose your chance of getting your mortgage renewal by your current lender.
If you also have more debt to pay for, and your credit score went down, this tells them that you on the path of filing for bankruptcy. Your mortgage renewal will be denied because your current lender will review these things to see if you have the ability to repay your monthly mortgage.
#2 You are denied by a new lender
It is normal for the homeowners to look for another lender that will give them a better mortgage term for their upcoming renewal. Some people being denied by their current lender is another reason to find a different lender.
However, switching with a new lender might be time-consuming because you will need to provide requirements, and submit an application again for them to review it because they know nothing about your financial situation. They need to review and verify your income as well to see if you meet their standard requirements for a mortgage.
If you get approved by a new lender, expect you will be hit with some new fees including a fee for your new contract, legal cost, appraisal of the property, a fee to end your mortgage with your current lender, etc.
Things you should consider if your mortgage renewal is denied
It is very important to search those things before making a decision, whether you are staying with your current lender or finding a new lender, make the best decision that will benefit you in the long run and suits your financial situation.
Canada’s big bank or credit unions have strict requirements for lending or renewal process, if you apply for a mortgage with bad credit and you got approved, expect a little higher interest rate and different terms.
If your financial circumstances have gotten worse, and your credit score hits down, you may talk to mortgage lenders that help with bad credit score rating.
If you have a very bad credit mortgage, you may consider contacting:
(https://www.creditrepairnow.ca or https://faizalgarasia.com) because they can help you with whatever your needs are. With a deep understanding of mortgage, credit, personal finance, taxes, real estate, current interest rate trend, and much more.
Getting denied by your current lender or a new lender can be frustrating and stressful. Don’t panic and don’t lose hope. There still a lot of individuals that are willing to extend their help for people who are having a hard time getting a mortgage.
By understanding why your mortgage is denied, it will come to your senses and you can make room for improvement; so you will not have the same result when you are ready to apply again.