Once you become a property owner, a mortgage renewal should always be in mind, whether it’s a month or 12 months away. Renewing mortgage in Canada is easy if you already know what to expect and have a reliable mortgage broker. Here is what you should know about renewing mortgage in Canada.
How does mortgage renewal work in Canada?
Once you get a mortgage with a financial lender, your loan contract is in effect for a specified period. This period of time is known as a mortgage term and ranges from a few months to five years or even longer. You must renew your mortgage at the end of each mortgage term unless you have paid the balance in full. You will most likely need multiple times to pay a huge mortgage in full.
With each mortgage, renewal comes the chance to evaluate your current mortgage rates and compare them to your financial goals. Your current provider will send a mortgage renewal slip in your mail that you can easily sign and send it back. However, if you want to be sure that all your financial needs are met, it is important to take a proactive approach when renewing mortgage in Canada. Work with an experienced mortgage broker to choose a renewal option that best suits your financial situation.
How soon can you renew your mortgage in Canada?
Things may have changed since you last signed your property mortgage agreement. Or you may be in a different stage of life where change is imminent. Regardless of what may have changed, your mortgage should fit your current financial situation, lifestyle, and future goals. These are some of the reasons you may want to know how soon or early you can renew a mortgage in Canada.
The process of renewing mortgage in Canada isn’t complex, but it is a good idea to start early. You should take a look at different offerings from your current lender and evaluate your current financial position and goals. This will help you determine the specific mortgage product that best suits your situation.
The earliest you can renew your mortgage in Canada is 120 days from the maturity date. Just mark your mortgage renewal date on your calendar and count back four months or 120 Days. That’s the earliest you can start renewing your mortgage in Canada. Most lenders allow their clients to renew their mortgages 120 Days before the maturity date without having to pay the prepayment charges.
Can your mortgage renewal be denied?
There are different situations where mortgage renewal gets denied. In case this happens to you, it is important to understand other options open to you. By keeping yourself informed about the reasons your mortgage renewal was denied and what you can do, you will be in a position to make an informed decision.
The causes for denial differ depending on the lender. Various policies for default forgiveness and various credit thresholds vary from one lender to another. So, why was your mortgage renewal denied?
Your current lender denied your mortgage renewal.
Most mortgages are offered by organizations commonly referred to as A lenders like banks and traditional financial institutions such as TD Canada Trust, Royal Bank of Canada, Bank of Montreal, and more. These financial institutions offer different mortgage rates. But given the fact that these lenders have higher standards of approval for mortgages and mortgage renewals, it can be challenging to qualify with them. That means if your renewal gets denied by the current lender, you can apply with a different lender.
Your current Canada and new lenders denied your mortgage renewal application.
Suppose you have been shopping around for better mortgage rates, and you are unable to meet the specific requirements of your current lender and other lenders. In this case, it can be because your financial situation isn’t up to their standards. But all hope is not lost.
You can still apply with B lenders such as bad credit institutional lenders and trust companies. These financial institutions deal in mortgages and different kinds of loans for Canadians who have bad credit or make less income compared to what’s required by a typical mortgage broker or bank.
Both A and B lenders denied your mortgage renewal
Suppose your credit score is extremely low and your current financial situation is worse; it can be very challenging to qualify for a mortgage renewal from both A lenders and B lenders. In this case, you may want to consider one of the following options to avoid your property from being foreclosed.
Consider a private lender: Some property owners prefer working with a private mortgage lender because they have the same benefits as traditional financial lenders. Still, their qualification standards are somewhat more reasonable. However, private mortgage lenders are less regulated, and their interest rates are often higher than those of traditional lending institutions.
Find a co-signer: One way to improve your odds of qualifying for mortgage renewal is to reach out to family members or friends to get a cosigner. As long as that individual has an excellent credit history and credit score, you’re likely to improve your chances of getting approved for a mortgage renewal.
Sell your property: This should be the last recourse and is only viable if all other strategies have failed. When necessary, selling your property to pay the outstanding mortgage balance could be a viable solution. Keep in mind that the profitability of this approach depends on the market situation and your timing.
Renewing mortgage in Canada – talk to your lender
If you are at risk of defaulting on your monthly payments and getting a mortgage renewal rejection by your lender, it is recommended to talk to your lender before you jump to conclusions. Also, please consult with an experienced mortgage broker who can help you shop around for better mortgage rates, compare them, and make an informed decision.
