How Long Does It Take to Get Back to a Bank?
There is no single timeline for moving from an alternative mortgage back to a bank. It depends on what prevented conventional approval in the first place and how quickly that issue can realistically be corrected.
← Back to the Alternative Mortgage SeriesThe Timeline Depends on What Needs to Change.
Some borrowers may be able to return to conventional lending within a year. Others may need longer. The key is identifying the issue, fixing it and allowing enough time for the improvement to show up in the file.
Credit Recovery
If credit was the issue, the timeline depends on how serious the past problems were and how quickly a clean payment history can be re-established.
Debt Reduction
If debt ratios were too high, paying down debt or restructuring monthly obligations may be what creates the path back to a bank.
Income History
Self-employed borrowers or people with newer income may simply need more time to build the documentation a traditional lender wants to see.
Time Since a Credit Event
A bankruptcy, consumer proposal or other major credit event often becomes easier to finance conventionally as more time passes.
Property or Equity Position
If the original issue involved the property or loan-to-value, the timeline may depend on paying down the mortgage, improving the property or building equity.
Lender Guidelines
Even after the file improves, the borrower still has to fit a bank's current qualification rules at the time of refinancing.
The Alternative Mortgage Should Buy You Time — Not Trap You.
A good alternative mortgage strategy starts with a realistic plan for what needs to improve during the term. The goal is to use the time productively so the borrower can qualify for lower-cost financing as soon as possible.
That may mean improving credit, reducing debt, documenting income, resolving arrears or simply allowing enough time to pass after a major credit event.
The exit strategy begins with identifying the exact reason conventional financing failed.
Know what needs to improve before the next refinance attempt.
Do not wait until the alternative mortgage is about to mature to assess your options.
Once the borrower qualifies, there is usually no benefit to remaining in higher-cost financing.
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