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Credit Deterioration
New collections, missed payments, high utilization or a significant drop in credit score can cause the lender to reassess the file.
ALTERNATIVE MORTGAGES · QUICK ANSWER
What If My Bank Declines My Mortgage Renewal?
A declined mortgage renewal does not mean you are out of options. Banks can refuse to renew because of credit problems, arrears, increased debt, changes in income or changes to their own lending guidelines. Alternative lenders may still be able to provide a workable solution.
← Back to Alternative MortgagesWHY A BANK MAY DECLINE
Renewal Is Not Always Automatic.
Even if you have made payments for years, the lender can still reassess the file at renewal. Changes in credit, income, debt, arrears or the lender's own policies can affect the outcome.
Bank Decision
Why was renewal declined?
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Property & Equity
How strong is the security?
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Alternative Option
Find the next best lender
WHAT CAN CAUSE A RENEWAL PROBLEM
There Are Several Reasons a Bank May Say No.
The reason matters because it determines which alternative lenders may still be available and how expensive the replacement mortgage is likely to be.
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Mortgage Arrears
If payments are behind, the current lender may be unwilling to renew without the arrears being brought current or the mortgage being refinanced elsewhere.
03
Higher Debt
Large increases in credit cards, loans or other obligations can materially change the lender's view of affordability and risk.
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Income Changes
Reduced income, self-employment, job changes or difficulty documenting income can create problems with conventional renewal or refinancing.
05
Property or LTV Concerns
Property type, condition, marketability or a high loan-to-value can affect which lenders are prepared to take over the mortgage.
06
Lender Policy Changes
Sometimes the issue is not the borrower at all. Lenders can change products, risk tolerance or renewal policies and decide a file no longer fits.
WHAT TO DO NEXT
Do Not Wait Until the Maturity Date.
A declined renewal becomes much harder to solve when there are only a few days left. The earlier the file is reviewed, the more time there is to obtain an appraisal, collect documents and compare alternative lenders.
The objective is to replace the bank mortgage with the least expensive realistic option and build a plan to move back to conventional financing when the file is ready.
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Get the Renewal Decision in Writing
Understand exactly why the bank is declining or changing terms.
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Confirm the Mortgage Balance
Know what must be paid out at maturity.
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Confirm the Property Value
An appraisal may be required for the replacement lender.
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Build the Exit Strategy
Use the alternative term to fix the issue that caused the bank decline.
THE PRACTICAL ANSWER
A Bank Decline Does Not Mean the Mortgage Cannot Be Renewed Elsewhere.
Alternative lenders are specifically designed for borrowers who no longer fit standard bank guidelines. The right solution depends on why the bank declined, the amount owing, the property value, available equity, income and credit. The earlier the file is reviewed, the more options there usually are.
Clear Advice. Practical Solutions.
Mortgage guidance for Ontario homeowners.
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