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Mortgage News 2022

What Credit Score Do You Need To Refinance A Mortgage?

2/22/2020

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There have been many changes to Canadian mortgage applications over the past few years, which include credit score requirements.

A credit score determines a person's creditworthiness as it reflects certain aspects of a person's credit character including repayment history, credit management and loan utilization, for example. With the changes to mortgage guidelines, including the implementation of the Mortgage Stress Test, lenders are now reviewing credit more closely. In fact, they are setting minimum score requirements for both purchases and refinances.

Purchasing

If a borrower is purchasing and has less than a 20 per cent down payment, their mortgage must be insured through one of the three high-risk insurance companies. Genworth and Canada Mortgage and Housing Corporation, for example, require a borrower to have a minimum credit score of at least 600. If a score is below 600, the mortgage application will likely be declined. Canadian mortgage law requires that any purchase with less than a 20 per cent down payment be insured; therefore, high ratio insurance policies do play an essential role in the mortgage approval process in addition to the lending guidelines and credit score requirements.

It's also important to consider that lenders will set their own guidelines regardless of what high-ratio mortgage insurance companies accept as "insurable."

Some lenders can also make exceptions to a person's credit by considering the strength of the mortgage application, such as income, employment tenure, down payment, and so on.


Refinancing

Refinancing usually requires a greater minimum credit score than that required when purchasing. The reason for harsher policies with respect to refinancing is due to mitigating overall risk and also that existing mortgage borrowers are looking to take on more mortgage debt in addition to their original loan amount.

Therefore, while some lenders such as major banks will accept minimum credit score of 650, other lenders such as Mortgage Finance Companies will only accept 680 or higher. Of course, there are exceptions to the rule, which is why working with a mortgage expert can help you in the approval process, especially if your score is below these requirements.

Additionally, alternative lenders accept scores of 480 or more, which opens up many opportunities for existing homeowners to obtain the financing they require, especially in situations where they are attempting to consolidate debt or access equity.

If you're looking to purchase or refinance, and have questions about your credit score, please do not hesitate to call or write.


Sarah A. Colucci
Mortgage Agent
Mortgage Edge, Broker 10680
Direct: (647) 773-4849
sarah.colucci@coluccimortgage.com

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Address

411 Queen St. 
Newmarket, ON
​L3Y 2G9

Sarah A. Colucci, Mortgage Agent Lic. M14000929
Sherwood Mortgage Group
Licence # 12176

Telephone

Direct: 647-773-4849
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Email: scolucci@sherwoodmortgagegroup.com
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  • Home
  • WHY USE SARAH FOR YOUR NEXT MORTGAGE
  • APPLY ONLINE
  • PRODUCTS
    • Free House Value Tracker Report
    • CASH-BACK MORTGAGE
    • BRIDGE FUNDS
    • REVERSE MORTGAGES
    • SELF-EMPLOYED MORTGAGES
    • FIRST-TIME HOME BUYER PRE-APPROVALS >
      • FIRST-TIME HOME BUYER TAX CREDIT
    • MORTGAGE REFINANCE >
      • Prepayment penalties
    • SPOUSAL BUYOUTS
    • INVESTMENT PROPERTIES AND RENTALS
    • BRUISED CREDIT
    • PRE-APPROVALS
    • NEWCOMERS
    • DEBT CONSOLIDATION
    • HOME EQUITY LINE OF CREDIT
    • PURCHASE PLUS IMPROVEMENT PROGRAM
    • WHY INVEST IN REAL ESTATE
    • MORTGAGE RENEWALS >
      • New Mortgage Rules and Mortgage Renewals
    • SECOND MORTGAGE LOANS
    • LESS THAN 20% PROPERTIES
    • DOWN PAYMENT
  • CONTACT ME
  • PRIME RATE CANADA
  • CLOSING COSTS
  • DOCUMENTS REQUIRED FOR MORTGAGE FINANCING
  • MORTGAGE DICTIONARY
  • MORTGAGE NEWS
  • GOVERNMENT MORTGAGE RULES
  • MORTGAGE TIPS
  • HOUSE HUNTING CHECKLIST
  • APPRAISALS
  • FIXED OR VARIABLE RATE?