Quote:
Originally Posted by Gerbs
What would happen in refinance and renewal? ^
I just made that scenario up since that's what happened in the US in 07. Where the home value went below the mortgage value.
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Generally, renewal is almost guaranteed. The bank did all the work to make sure you qualified for the first mortgage.
Re-financing means you are getting a new mortgage so you will need to go through the process again. One of the examples is what Westopher mentioned. You owe a lot of debit so you re-finance or get a home line of credit to pay off the debt. Usually the Heloc is at a lower rate than the interest from CC's or other loans.
This is what happened in the US. They bought a house for $200K and it went up to $400K. They took a line of credit against this new found "equity" and bought new cars, funiture or trips. Then when the market turned around, the bank calls and they don't have the money to pay off the difference.