A mortgage renewal can be stressful, even at the best of times. But how do you renew your mortgage if you have suddenly become unemployed? Or, underemployed or injured with limited income to deal with in this time of crisis? Your bank will reject your mortgage renewal if you are unemployed based on your lack of capacity to pay the mortgage.
In that case, turning to a mortgage broker who has many options available is the best course of action. Brokers work with lenders to help the mortgage renewal process for the financially challenged, and in most cases, brokers are sensitive to their client’s needs.
Ask Your Current Lender
When the time comes to renew your mortgage, your current lender is the best and easiest alternative. With your current lender, they won’t necessarily re-confirm the details — like with employment verification — so you won’t have to divulge your current employment situation.
If your lender — for institutional approval reasons — demands re-verification of your employment details, disclose all pertinent information. If your unemployment disqualifies you from a mortgage renewal with your current lender, don’t despair. There is a credit instrument for everyone to access homeownership.
Look Around for Other Lenders
If your current mortgage is held by one of the big five banks or a credit union, it means you have excellent creditworthiness. Moving to another lender in this sector will require an entirely new application that will demand disclosure of your current employment.
Moving to the secondary market can be the best solution for a person with employment challenges. Secondary lenders tend to have higher interest rates based on the risk factor, and your broker can help identify lenders who can help under these circumstances.
Your Last Resort
A bank or an alternative lender has turned you down when you need a mortgage renewal. Seeking a private lender or institutional group that specializes in working with the credit-challenged is another way for the unemployed to find help.
The predominant focus of the two groups is on equity and property rather than the capacity to pay. Generally, these groups seek interest rates of up 12%, and they are looking for candidates that hold at least 15% equity in their property.
Private lenders often partner with mortgage brokers to identify opportunities. You will need to work with a broker who has access to these types of lenders to consummate a deal.
A mortgage renewal without a job is not the end of the world. Mortgage brokers can find approvals for all kinds of borrowers, so do your due diligence when shopping for your mortgage renewal if you are unemployed.