It is unusual for lenders to deny mortgage renewals however there are circumstances where it can and does happen. This scenario can be quite frightening for a homeowner because it leaves them with uncertainty about whether or not they will be forced to sell their home. If your mortgage renewal has recently been denied, don’t panic. There are options.
Why might a mortgage renewal be denied?
The most common reason why a lender might deny a mortgage renewal is that the homeowner has experienced a large drop in their credit rating. If your mortgage renewal has been denied, your first course of action should be to contact your mortgage broker. The earlier you contact your broker, the better your options will be.
What steps should your take when your mortgage renewal has been denied?
Once you contact your mortgage broker, they will take you through a series of steps. While it is possible to try and navigate this chain on your own, you are likely to get better rates and terms if you work with a professional mortgage broker that already has established relationships with lender.
A Lenders and B Lenders
The best mortgage rates and terms will be available from A Lenders (banks, credit unions, etc.) but A lenders will only work with borrowers that they consider low risk. So if your credit has been damaged, your mortgage broker will review what options you have with B lenders. (B lenders are institutions that specialize in helping people with damaged credit).
An alternative to working with B Lenders is working with a private lender. This is an individual – possibly a friend or family member – or company that invests in mortgages. Mortgages with private lenders typically have higher interest rates but they are also usually for shorter terms so this could be an option for you while you are repairing your credit.
Selling Your Home
If you are unable to renew your mortgage even with a private lender – or if you decide that you do not wish to go this route, the final option is to consider selling your home.
Having your mortgage renewal denied rarely means that you will have to sell your home however in some very extreme cases it may be your best option. Before you get to this point however, you should contact Akal Mortgages. One of our mortgage experts will be happy to help you!