Large Canadian banks will only approve a mortgage application if the applicant has a good credit score. If you do not have a credit score of at least 600, then you do not have a chance of getting a bank mortgage. Our staff are experts at getting our clients bad credit mortgages in Richmond Hill.
Credit Scores That Different Lenders Require
Canadian banks and trust companies will refuse to negotiate your mortgage approval if you do not meet their credit score requirements. Private lenders are much more lenient and can work with you even if you have been turned down by your bank. Our brokerage provides people with access to private lenders that offer bad credit mortgages in Richmond Hill.
All mortgage providers are able to pull your credit score from the Canadian credit bureaus Equifax and TransUnion. Our brokerage is one of these mortgage providers, and we give people a copy of their credit report for free upon request. Alternatively, you can go directly to the sites for Equifax and TransUnion and get your credit score for a small fee. Credit scores are damaged when a person does not pay their bills, has too much overall debt, or has gone through consumer proposal or bankruptcy.
Without a high credit score, only a private lender will be able to give you a mortgage. Private lenders can offer mortgages to properties in Richmond Hill without checking a credit score. Private lenders also offer mortgages to people who have gone through bankruptcy or consumer proposal. We have contacts with lenders that service all of Ontario which includes Richmond Hill.
When deciding whether or not to approve a mortgage a lender will examine the value of the property and the existing mortgages on the property. When a property has too much in secured debt, a lender will not be able to lend against it. Under the Ontario Mortgages Act, a lender can sell a mortgaged property if the borrower has failed to pay their fees for over 2 weeks. When the property is sold by the lender, the mortgages must be paid out in the order in which they are placed on the property. This means that a lender will lose money on a second or third mortgage if the value of the first mortgage is close to the value of the property. Lenders determine the risk level of a deal by calculating the Loan to Value ratio (LTV) of the property. Lenders that invest in Richmond Hill are able to lend on properties up to 85% LTV. Private lenders are flexible when it comes to mortgage rates and terms, and may provide discounts if you can show a high income.
People with bad credit must seek a private lender if they want a mortgage on their property. As with all risky investments, bad credit mortgages have relatively high-interest rates. Banks offer the lowest interest rates of around 3% to 4% while private lenders charge rates of 7% to 15%. With a private mortgage there are additional fees needed in order to set up the mortgage. The private lender will pay their staff, their lawyers, and a home appraisal company. Our brokerage provides clients with a handful of offers and can give recommendations on which offer we feel is best.
Credit scores can only improve if you make a habit of paying all of your bills and credit card fees every month. Some people prefer to put small charges on their credit cards in order to easily pay them and improve their credit score. A more expensive but foolproof method of improving credit score is to apply for a secured credit card at a bank. This type of credit card requires an initial deposit which is used when the card’s fees are left unpaid. It is not recommended to exceed 60% of the card’s credit limit. After around 6 months of consistently paying off bills and credit cards, your credit should be repaired.