The Canadian mortgage process is a bit complicated to say the least. In Canada, mortgage loans are only set to last for 10 years and you will need to renew it every end of term. This is somewhat a far cry from the usual length of mortgages elsewhere. Usually, most mortgage loans last for 15-30 years. This is the ideal length for you to pay off your house. 10 years is just not enough for many to completely pay off their loans.

The chance of you being granted a renewal relies on a lot of things. First, you need to maintain your monthly payments. This means that you must not miss payments. Second, you need to make sure that you have stable and regular job that can sustain those payments. This plays a huge role in how the banks view your financial situation. Lastly, your credit score must have a consistent positive status.

It is highly suggested that you ask your bank about the renewal process way before your loan’s term ends. This way you can immediately find out if you are going to be renewed or not. However, what happens if your bank tells you that they will not renew your mortgage?

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The reasons why your application for renewal could get denied would vary from one lender to another. However, it all boils down to one generalized reason: you did not meet the qualifications. If you are declined for renewal, you will be hurled into a very complicated situation unless you are prepared with a secondary option. If you get denied without a backup plan, then you will be in a sticky financial situation or worse, you could be forced to sell your home. Fortunately, the latter is only a worst-case scenario. There are plenty of things you can do if a bank denies your application for renewal.

 

  • You can try to talk to other lending companies such as trust companies and bad credit institutional lenders. These lenders are around to help those who do not qualify for a bank loan. They are more forgiving when it comes to their requirements. If you explain your current situation and they deem you as a worthy client, then they will help you.

 

  • If your credit score fails to meet the aforementioned lending institutions’ requirements, then the next choice are private lenders. Financing companies have networks of private lenders (mostly individuals and companies) who are willing to invest in higher risk loans.

 

  • These loans are very short and have higher interest rates than banks. This is not surprising since they are designed to help you raise your credit score rather than to sustain your mortgage payments. They will help you eventually qualify for a renewal at your bank. It is more of a lifeline more than anything.

 

It is very important to be proactive and ask about your renewal’s status as early as 3-6 months before your term ends. This will give you ample time to evaluate the alternatives provided above. You will need as much time as possible looking for lenders that can help you with your situation. Thankfully, there are a lot of lenders like these in Canada and everywhere else in the world.

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