Are you Renewing a Mortgage with Bad Credit? Are Banks saying NO? There are several factors involved in order to renew mortgage with bad credit. When you come to the end of an interim mortgage period with your lender, the mortgage renewal process takes place. For borrowers in Canada, the vast majority of mortgages set out monthly payment totals so that if you pay each month in a timely manner, the loan takes about 30 years to pay off. This time frame is the amortization period. However, Canadian mortgages have terms that are much shorter than the number of years you need to pay off the full mortgage.
Mortgage Renewal Bad Credit
What if your credit is bad when your mortgage is up for renewal? “Here’s an example of Renewing mortgage with bad credit: You receive a $300,000 mortgage for your $400,000 house with an interest rate of 9% for a 5-year term….”. Based on a 30-year amortization, your monthly payment is $2,413.87. Because the term is only five years, though, you won’t be close to paying the note off at that time, even if you make each payment on time. The mortgage lender has the right to demand payment in full in lieu of renewing the mortgage. At that time, you have to renew the mortgage or find a different source of money to replace the loan, essentially paying off your first lender and taking over your note.
If you are making your payments on time and in full, you generally don’t have any problems renewing that mortgage. It works a lot like renewing your auto insurance: you receive a packet of renewal papers in the mail. You fill them out, sign them, and return them, and the mortgage lender puts the new loan in place. The new mortgage is based on the amount that you owe at the end of the prior term. So you might have paid that $300,000 note down to $280,000 after the first five years. Your new mortgage will not be for $300,000 but instead for $280,000. You maintain the equity that you acquired from those first years of payments.
Mortgage Renewal in Canada – renewing mortgages with bad credit or debts
In Canada, if you have fallen behind on your Mortgage payments, or even if your credit has fallen into trouble or looking to renew mortgage with debts, your mortgage holder might refuse renewal of your mortgage loan. If that happens, then you need to get alternate funding in a hurry. Amansad Financial has the connections throughout western Canada to find clients alternative sources of funding. You don’t want to lose the equity that you have in your house, so even if you have to pay a slightly higher rate of interest in your next mortgage, using a source such as Amansad to find a new mortgage holder is definitely preferable.
How to renew mortgage
One of the most popular sources of alternative funding that Amansad Financial has connected with many clients is the private lender. This is an organization or individual that is looking to make some money in the real estate market but wants to draw more interest than what the traditional lenders are making from borrowers. The good news for people with poor credit is that, while credit score is part of the equation, it’s not nearly as much a part as it is with the banks. If you have enough equity to put 25 or 30 percent down (although some lenders will take as little as 15 percent down) as part of transferring the loan over, then a private lender is much more interested in whether the LTV (loan-to-value) ratio fits within acceptable parameters. If the lender feels that he can get his money back through a forced sale in case of default, then your chances are fairly good for approval.
There are some differences with this sort of loan, of course. First, the interest rate is going to be higher — sometimes north of 10 percent, depending on how your credit score turns out, and how much you need to borrow. Second, though — and this is actually good news — is that you won’t get a term of more than two or three years. You might think that this is putting you under the gun, but it means that you’ll be paying that high interest rate for a shorter period of time. This is when you should be working on building up your credit so that you can apply for a new bank loan when the private loan comes to the end of its term. Some private lenders will allow you to make interest-only payments, freeing up more money for you to handle some of your other debts during this time period, making your credit even better.
The last thing that you want to do if your credit has been slowly worsening is to let your mortgage get to a point of crisis. If you can make the payments and your lender has indicated some flexibility with your upcoming renewal, your best bet might be to stay right where you are. However, if things aren’t sounding good, you definitely don’t want to have your whole mortgage go into the tank. Give one of our private lending specialists at Amansad Financial a call today, and we’ll go over your situation.
Renewing Mortgage Process
How does mortgage renewal work? Talk to your first mortgage holder several months in advance to see if renewal is going to take place, if you are worried about non-renewal. If you have fallen behind on payments, Amansad Financial has connections with many lenders who specialize in less than ideal credit situations, and you can get help from many of them. We have helped many people in a similar position to your own.
The key lies with your credit report and what you can do to remedy some of the more serious issues. If you can take advantage of an opportunity to satisfy some of your creditors from the report in full, then it can be even easier to find a second mortgage holder to provide the funding for you to keep your house.
Renewal of mortgage
What if you are current on your payments, your credit is still good, and you get the renewal papers in the mail? Should you just fill out the papers and mail them back in? The answer might be different than what you think. Take a look at the interest rate on your renewal paperwork. Then, give Amansad Financial a call or email. One of our mortgage specialists will give you a quote on your situation, and some of our funding sources may be able to offer you a loan at a significantly lower rate than your renewal offer. Even over a term of five to ten years, that lower rate can bring you significant savings, so you should definitely give matters a look. The reason for having shorter terms on mortgages than the amount of time you need to pay off the note is to protect the lenders from people who have a poor payment history, so use the mortgage renewal process to put the power back in your own hands. Let Amansad Financial help with renewing your mortgage even with bad credit today.