Kokanee Mortgage
  • About
  • Products
  • Where We Lend
    • British Columbia
    • Alberta
    • Saskatchewan
    • Manitoba
    • Ontario
    • Yukon
  • Appraisers
  • CONTACT
  • Menu Menu
Financing a Purchase vs a Refinance

Financing A Purchase vs A Refinance

May 6, 2021/in Articles /by Chris

From a borrower’s perspective, it may seem that the process for financing a purchase vs a refinance shouldn’t be all that different.

In reality, there are some significant differences that can potentially lead to different financing outcomes.

As a broker, when you’re submitting a deal to an MIC or private lender, it’s important to remember and to inform your borrowers that the lender’s underwriting for purchases may be different than for refinances.  The reason for this is the lender must apply their experience from previous files in order to minimize risk.  And at first this may seem confusing, especially if your borrower is new to refinancing.

So, let’s break it down:

The first difference in financing a purchase vs a refinance is going to be LTV.  The LTV is a function of confidence in the value of the property.  In a purchase situation, the purchase price is the best indicator of the value of that property.  That being said, a lender may be willing to give a higher LTV, as the price is indicative of current market values.

In a refinance, however, the lender is relying on an appraisal.  The appraisal is the best estimate of the fair market value.  As this in only an opinion of value, lenders may be more conservative in their LTV on a refinance.

The next major difference lies in the history.  A lender’s history may indicate more defaults in previous files with refinances than with purchases.  While this may not necessarily be the case with your borrowers, lenders will make decisions based on their own history and past clients.  If this is the case, they may be forced to be more conservative in their underwriting.

Informing your borrower from the beginning of the differences between a purchase and a refinance will help clear any confusion.  Knowing the differences and the reasoning behind them can also help to manage expectations.  And as always, if you have any questions, call the expert underwriters at Kokanee Mortgage for help.

 

Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share on Tumblr
  • Share on Vk
  • Share on Reddit
  • Share by Mail
https://kokaneemortgage.com/wp-content/uploads/2021/05/Untitled-1080-×-600-px-29.jpg 600 1080 Chris https://kokaneemortgage.com/wp-content/uploads/2021/08/logo-kokanee-mortgage.png Chris2021-05-06 12:02:462023-06-23 11:52:10Financing A Purchase vs A Refinance
newsletter-signup-button_side

Recent Posts

  • Financing Borrowers in a Consumer Proposal
  • Why Character Matters In Alternative Lending
  • Why We Lend In Small Towns When The Banks Won’t
  • What To Do When A Borrower Passes Away
  • Rising Interest Rates And Affordable Payments?
Kokanee Mortgage
  • Ontario: (416) 800-0723
  • Western Canada: (250) 828-2849
  • Toll Free: 1 844 KOKANEE (565 2633)
  • Text: (250) 299-6926
  • info@kokaneemortgage.com
Newsletter Sign-Up
  • About
  • Products
  • Where We Lend
  • Appraisers
  • Investors
  • Articles
  • Contact
Facebook
Instagram

2021 © Copyright Kokanee Mortgage | Privacy Policy  |  Terms of Use    Site by Ignite Design

MICs and Rent-To-Own Deals Rent-To-Own Challenging Property Locations Challenging Property Locations
Scroll to top

This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.

AcceptHide notification only

Cookie and Privacy Settings



How we use cookies

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

Essential Website Cookies

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, refuseing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

Google Analytics Cookies

These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.

If you do not want that we track your visit to our site you can disable tracking in your browser here:

Other external services

We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Google reCaptcha Settings:

Vimeo and Youtube video embeds:

Other cookies

The following cookies are also needed - You can choose if you want to allow them:

Privacy Policy

You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

Privacy Policy
Accept SettingsHide notification only