You may have made every mortgage payment on time. You may also be keeping up with the agreed debt-management payments. Yet your bank may still decline additional funds, refuse a refinance or offer a renewal that does not solve the underlying cash-flow problem.
If your mortgage renewal is approaching during a debt management plan in Ontario, the available equity in your property may create another path.
Why Banks May Treat a Debt Management Plan Differently
A debt management plan is not necessarily the same as a consumer proposal or bankruptcy. However, it can still appear in the borrower’s credit history and signal that existing unsecured debts became difficult to manage.
The bank may review the remaining balances, repayment history, credit score, income and total monthly obligations. Even when the mortgage itself is current, the borrower may no longer fit the lender’s conventional refinancing guidelines.
The result can be frustrating: the homeowner needs to consolidate debt to improve monthly cash flow, but the bank will not provide the funds required to complete the consolidation.
How an Equity-Based Mortgage May Help
Lendworth may review a debt-consolidation mortgage based on the property value, available equity, existing mortgages and a realistic repayment plan.
The mortgage could potentially repay the debt-management balances, high-interest loans, credit cards or other approved obligations. Reducing the number of monthly payments may give the homeowner time to rebuild credit and prepare for a return to conventional financing.
Depending on the circumstances, this may involve a mortgage refinance, second mortgage or short-term private first mortgage.
The objective should not be to move debt around without a plan. The new financing should address the cause of the pressure and include a credible exit, such as improved credit, reduced balances, stronger documented income or a future sale.
Apply Before the Renewal Becomes an Emergency
Waiting until the final week before maturity limits the time available to obtain payout statements, review the property and coordinate the new mortgage.
Homeowners should gather the current mortgage statement, renewal notice, debt-management statement, property-tax bill, income information and a complete list of remaining debts.
Lendworth can also review options for homeowners who need a bad-credit mortgage or whose mortgage renewal was declined.
If your debt management plan is affecting your mortgage renewal, call Lendworth at 905-597-1225 or request a confidential review.
Your Equity Deserves More.