The major Canadian banks require a high credit score in order to approve a mortgage. Without a credit score of 600 or more, you will not be approved for a mortgage at a bank. Our team specialises in setting up bad credit mortgages in Windsor.
Credit Scores for Mortgage Approval by Different Lenders
Banks and trust companies will not provide mortgages under any circumstances to a person with bad credit. Private lenders work with people who the banks turn down and can provide mortgages in different situations. Our team connects our clients with private lenders that provide bad credit mortgages in Windsor.
People who provide mortgages have the ability to create copies of your credit score. Our team can also generate these reports and give it to you free of charge. The credit bureaus Equifax and TransUnion can give you a copy of your report if you request it on their respective websites. A bad credit score is a result of not paying bills, taking on too much debt, or going through bankruptcy or consumer proposal.
If you do not have a credit score of at least 550, you will need the services of a private lender that lends on homes in Windsor. Private lenders are able to lend on homes in Windsor no matter what the applicant’s credit score might be. These lenders can also service people who are turned away by banks because of bankruptcy or consumer proposal. Our large network of Ontario lenders includes many lenders that provide bad credit mortgages in Windsor.
Before approving a mortgage application the lender will check the value of existing mortgages and get an estimate of the selling price of the property. If a lender sees a very high amount of existing debt in a property they will not agree to put a mortgage on a property. As permitted by the Ontario Mortgages Act a mortgage lender is able to sell the subject property when the mortgage is left unpaid for a few weeks. When the lender sells the property they must first pay out the previous mortgage lenders before reclaiming their own money. The risk of a mortgage deal can be determined by looking at the Loan to Value (LTV) on a property. Private lenders that service Windsor can go up to 80% LTV on a property. Private lenders may be willing to reduce their interest rates if a person can show a high income or credit score but ultimately the LTV will determine if the mortgage is approved.
People who cannot qualify for the low rate mortgages offered by banks must use a private lender. Private mortgage lenders will charge more than banks because they mainly deal with riskier mortgages. Banks in Canada provide mortgages with rates of 3% to 4% and private lenders provide mortgages with rates of 7% to 15%. Private mortgage lenders will also charge other fees needed to pay the people who set up the mortgage. Lenders pay their administrative staff, their legal team, and a home appraiser to get an estimate on the value of the property. Our team can get in touch with many different lenders and give you a handful of mortgage quotes.
To increase credit score you must ensure that bills and credit card fees are fully paid at the end of each month. Putting a smaller amount of the credit card means you will be able to easily pay off the charges. A safer option for increasing credit score is to obtain a secured credit card from your bank. The secured credit card requires an initial deposit which is used when the card’s charges are not paid. Generally, you will not want to exceed 60% of this card’s credit limit. It takes around 6 months to improve a poor credit score.