Refinancing your mortgage sounds like such a simple thing, doesn’t it? You decide that one part of your current loan isn’t working out very ideally for you – maybe you want a longer term or a longer amortization period – and you go speak to a mortgage broker who can help make that happen. Easy. But, be careful. It actually won’t be that easy, and you’ll have many questions that you’ll have to face, say mortgage brokers in Ottawa.
The fact is that when you need to change your mortgage loan, especially if you’ll be adding on more debt or change the rates, the lender will have a lot of different questions that you’ll have to answer – and those answers better be the right ones if you want to get the change you’re looking for. Lenders will ask heavily about your job and your income, making sure that you’ll be able to repay your mortgage, even with the new terms outlined. If you don’t have proper supporting documentation, especially if you’re self-employed and are working with the strict regulations on self-employed mortgages that many lenders have started including in their approval processes.
You’ll also need to look at the mortgage history and more importantly, your payment history. Have you been good about paying off your mortgage, or have you often been late or behind in payments? This will play an extremely important role, as those who have bad payment history on their mortgages will not be deemed a suitable candidate for a mortgage change, no matter what that change is.
The last, major thing that lenders will look at is home equity – the more you have, the better your chances at being allowed to change your mortgage. This is because the more equity you have, the more leverage you have, and you’ll even be able to use it to apply for a home equity loan, in case you can’t change your first mortgage to free up cash in some other way. Homeowners with a lot of equity are generally looked up well by lenders, as they can always borrow against their home. And the additional step of a home equity loan might not even be required, as lenders also look favourably upon those that want to change their mortgage, and have equity in their home.
Refinancing your mortgage can be pretty easy – if you meet the requirements of the lender. Before applying, always speak to a mortgage broker who will tell you what questions you’ll be facing, so you can make sure that you’re prepared for them.
