The majority of Canadian banks require a high credit score when approving mortgage applications. Without a credit score of at least 550, banks and trust companies will not approve a mortgage. We specialise in providing our clients with bad credit mortgages in Markham from private lenders.
Credit Scores That Different Lenders Require
Many mortgage lenders such as banks can produce copies of your credit score that are generated by Equifax and TransUnion. Our mortgage brokers can make copies of your credit report and we can provide it on request, free of charge. Another option is to get a copy from TransUnion or Equifax by submitting the request forms on their website. Your credit score is likely to be poor if you don’t pay your bills, go through bankruptcy or consumer proposal, or are generally overwhelmed with debt.
How to Get Your Credit Score
Most lending institutions are able to create copies of your credit report using the information given to them by Canadian credit bureaus Equifax and TransUnion. Our team also has the ability to generate credit score reports, which we can provide for free. You can also visit the websites of these credit bureaus and request your credit report. Your credit score is reduced when you don’t pay bills, take too much debt, or go through consumer proposal or bankruptcy.
People with a credit score of less than 550 will only be able to get a bad credit mortgage in Markham from a private lender. The private lenders that lend in Markham can provide mortgages regardless of the applicant’s credit score. Banks will always turn down mortgage applications from people who have gone through bankruptcy or consumer proposal. We are able to connect our clients with our large network of private lenders that lend on homes in Markham.
Private mortgage lenders will need to look at the existing debts on your property and get an estimated selling price for your property. Properties with very high amounts of existing debt are generally rejected by private lenders. According to the Ontario Mortgage Act, a private lender may sell the mortgaged property if the borrower does not make their payments. The lender can recoup their money after the property is sold and the previous mortgage holders are paid. To measure how risky a mortgage deal is, the lender will calculate the Loan to Value (LTV) on a given property. The LTV of a property can be found by taking the value of existing debts and dividing that by the predicted selling price of the property. Private lenders are able to lend on properties with a LTV of up to 80%. A good income and credit score can help you negotiate a better interest rate, but are not needed for mortgage approval
Private lenders have higher interest rates on their bad credit mortgages when compared with bank mortgages. Private lenders charge more than banks since they invest in riskier deals. Bank mortgages will usually have an interest rate of 3%-4% and private lender mortgage have an interest from of 7%-15%. Private lenders will have additional fees for starting the mortgage. Private lenders must pay fees to their lawyers, their own staff for processing the deal, and a home appraisal company. Getting quotes from multiple private lenders will help you get the best deal. Our brokerage is connected with a large network of Ontario lenders and can help you apply with several lenders at once.
Your credit score will gradually improve if you consistently pay all bills and credit cards on time. Taking less debt helps to ensure that your monthly payments are reasonable. All bills and credit cards should be fully paid at the end of every month to quickly repair your credit score. Putting small charges on the credit card make it easy to pay, or you can ask for a secured credit card from your bank.
Secured credit cards are offered at most banks and are a safe way to improve credit. You must make an initial deposit which is used to make payments when you fail to. It is recommended to not exceed 60% of the card’s credit limit. Credit scores can improve when payments are consistently made for six or more months.