Refinancing is basically renegotiating your mortgage agreement with the bank.
You may feel like doing this to consolidate debts, or to utilize the equity in your home to increase your mortgage loan amount to pay for expenses. You might be able to avoid prepayment penalties if you refinance at the end of your current mortgage term.
The eligibility criteria for refinancing a mortgage are similar to getting a mortgage the first time around. Generally, lenders will want to take a look at the following things about you:
If a lender decides to refinance your mortgage, you’ll usually receive an offer according to how much of a risk the lender feels you represent to them. For example, you have a great credit history, and a high income, and you have a lot of equity in your home, you might get approved for better terms and conditions on the new loan.
On the other hand, if your credit score has declined since you received your first mortgage or you have more debt, you might have more difficulty getting approved for more favorable terms and conditions.