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Lender Not Offering a Mortgage Renewal?

Refinance Non-renewing Mortgage.

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Lender Not Offering a Mortgage Renewal?
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What is a Mortgage renewal?

Lender Not Offering a Mortgage Renewal?

So, is your lender not offering a mortgage renewal?When the maturity date of your mortgage is approaching, the process of your mortgage lending reaching out to you with various mortgage renewal options which generally pertain to the mortgage interest rate and mortgage term length. For example, your mortgage lender may offer you various mortgage term options (i.e., 6 months, 1 year, 3 years, 5 years) with the respective mortgage interest rates. Keep in mind that the mortgage renewal interest rates that your existing mortgage lender will offer to you may differ from your existing mortgage interest rate. In most cases, this is simply a result of an increase or decrease to the cost of capital. For example, your existing mortgage interest rate may have been offered to you in a lower interest rate environment that the prevailing interest rates at the time of maturity. It is ultimately your decision as to which mortgage renewal option best coincides with your short and long term goals. 

why would a lender not offer a renewal?

How to replace a non-renewing mortgage.

There are generally a few reasons as to why a mortgage lender would not offer their client a mortgage renewal. Generally speaking, most Canadian bank lenders will provide a mortgage renewal option to clients that have made orderly mortgage payments and whose mortgage account is in good standing at the time of the mortgage renewal process. In some instances, mortgage lenders may not offer a client a mortgage renewal if there have been late mortgage payments during the mortgage term. In other cases, mortgage lenders may not offer their client a mortgage renewal if they’re unable to provide satisfactory income, revenue or financial statements that the lender requires although this mainly applies to commercial mortgages. The most recently witnessed theme of non-renewals have been in the private mortgage lender space where private mortgage lenders have not been renewing private mortgages in particular situations. The main two reasons behind this theme come down to the current cost of capital (private mortgage rates) in 2023 compared to prior years, mainly a result of an increase in the prime interest rate. In other words, private mortgage lenders wish to recoup their capital and fund new private mortgages at prevailing interest rates. In other cases, depending on the location of the real estate collateral, property values have declined. Therefore, depending on the private mortgage ‘loan to value’  private mortgage lenders may not believe that their mortgages are secure and wish to recoup their capital. 

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What to do when a mortgage lender is not offering a mortgage renewal?

Private Mortgage Lenders Not Renewing Loans?

If you receive notice from their bank or private mortgage lender that they are not offering a mortgage renewal, the mortgage replacement process should commence immediately. In other words, the real estate owner may wish to consider connecting with DV Capital who is able to provide a complimentary mortgage assessment to determine mortgage replacement options. This mainly depends on your income and credit profile, the type, value, location and condition of the real estate, the existing equity and loan to value, the existing mortgage setup and other relevant mortgage underwriting and qualification requirements. Timing is an important aspect and it is important to be mindful of the mortgage maturity date in order to ensure that the mortgage replacement will be funded in time to payout the non-renewing mortgage. In some cases your mortgage lender may auto-renew the mortgage with an interest rate premium and in other cases the lender may initiate post maturity default legal proceedings. 

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