Are Lenders Obligated to Renew Mortgages?

Michael Hallett • Oct 29, 2019
It's a common held belief that if you've made your mortgage payments on time throughout the entirety of your mortgage term, that your lender is somehow obligated to renew your mortgage. This is simply not the case. The truth is, a lender is never under any obligation to renew your mortgage. The initial mortgage contract was drawn up for a defined time, when that term comes to an end, the lender has every right to call the loan. 
Now, granted, most lenders are happy to renew your mortgage if you have made all your payments on time but there are several factors that can come into play that could prevent this from happening. If the lender becomes aware that you have recently gone through a divorce, a bankruptcy, or a job loss, they might be hesitant to renew your mortgage. Although more frequently seen in commercial mortgages, banks will often decide not to renew a mortgage if they don't like the economic climate or certain geographical area.

So how do you protect yourself? Well, the first plan of action is to speak with your mortgage professional about your options at renewal at least 90-120 days before your term is set to expire. This will ensure you have enough time to look at all your options. It might make sense to switch to another lender, or it might make sense to stay put. However, by dealing with an independent mortgage professional (as opposed to directly with the lender), you have someone working for you, on your team, instead of someone working for the lender, trying to make money for the lender. 

The best plan of action is to be prepared, and to have a plan in place. If you would like to talk about your financial situation, please contact me anytime, I would love to work with you.

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Getting a Mortgage While on Parental Leave

By Michael Hallett • 01 May, 2024
Chances are if the title of this article piqued your interest enough to get you here, your family is probably growing. Congratulations! If you’ve thought now is the time to find a new property to accommodate your growing family, but you’re unsure how your parental leave will impact your ability to get a mortgage, you’ve come to the right place! Here’s how it works. When you work with an independent mortgage professional, it won’t be a problem to qualify your income on a mortgage application while on parental leave, as long as you have documentation proving that you have guaranteed employment when you return to work. A word of caution, if you walk into your local bank to look for a mortgage and you disclose that you’re currently collecting parental leave, there’s a chance they’ll only allow you to use that income to qualify. This reduction in income isn’t ideal because at 55% of your previous income up to $595/week, you won’t be eligible to borrow as much, limiting your options. The advantage of working with an independent mortgage professional is choice. You have a choice between lenders and mortgage products, including lenders who use 100% of your return-to-work income. To qualify, you’ll need an employment letter from your current employer that states the following: Your employer’s name preferably on the company letterhead Your position Your initial start date to ensure you’ve passed any probationary period Your scheduled return to work date Your guaranteed salary For a lender to feel confident about your ability to cover your mortgage payments, they want to see that you have a position waiting for you once your parental leave is over. You might also be required to provide a history of your income for the past couple of years, but that is typical of mortgage financing. Whether you intend to return to work after your parental leave is over or not, once the mortgage is in place, what you decide to do is entirely up to you. Mortgage qualification requires only that you have a position waiting for you. If you have any questions about this or anything else mortgage-related, please connect anytime. It would be a pleasure to work with you.

Bridge Financing and Deposit Lending

By Michael Hallett • 24 Apr, 2024
Let’s say you have a home that you’ve outgrown; it’s time to make a move to something better suited to your needs and lifestyle. You have no desire to keep two properties, so selling your existing home and moving into something new (to you) is the best idea. Ideally, when planning out how that looks, most people want to take possession of the new house before moving out of the old one. Not only does this make moving your stuff more manageable, but it also allows you to make the new home a little more “you” by painting or completing some minor renovations before moving in. But what if you need the money from the sale of your existing home to come up with the downpayment for your next home? This situation is where bridge financing comes in. Bridge financing allows you to bridge the financial gap between the firm sale of your current home and the purchase of your new home. Bridge financing allows you to access some of the equity in your existing property and use it for the downpayment on the property you are buying. So now let’s also say that it’s a very competitive housing market where you’re looking to buy. Chances are you’ll want to make the best offer you can and include a significant deposit. If you don’t have immediate access to the cash in your bank account, but you do have equity in your home, a deposit loan allows you to make a very strong offer when negotiating the terms of purchasing your new home. Now, to secure bridge financing and/or a deposit loan, you must have a firm sale on your existing home. If you don’t have a firm sale on your home, you won’t get the bridge financing or deposit loan because there is no concrete way for a lender to calculate how much equity you have available. A firm sale is the key to securing bridge financing and a deposit loan. So if you’d like to know more about bridge financing, deposit loans, or anything else mortgage-related, please connect anytime! It would be a pleasure to work with you.
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