It has been an unprecedented year for all of us. The Covid-19 pandemic has affected many aspects of our life as well as affecting the economy as a whole. Many businesses have been forced to temporarily shut, work schedules have been in ongoing upheaval, and some have faced layoffs during this undoubtedly stressful time.
Like the economy as a whole, many have taken a hit to their pocketbook and may have suffered in the realm of personal finances. Finances can be tight and it may be difficult to pay bills reliably. The financial squeeze may be too much. As a result, your credit score may have dipped. Perhaps you have been looking to secure a mortgage loan, whether it be a first mortgage on a given property, or refinancing the property you already own.
Before the pandemic, it had already become increasingly more difficult to obtain mortgage financing with the overall tightening of restrictions surrounding mortgage approval by the traditional lenders including the big banks. The mortgage stress test has been harder to pass and has left many feeling that their goal of owning their own home has become an impossible dream.
Does this mean you should not apply for a mortgage loan or consider the option of refinancing your current property? It is still possible to obtain a mortgage loan or other short term financing despite poor credit. One option still open is to apply for a Bad Credit Mortgage Loan.
What is a Bad Credit Mortgage- Understanding your Beacon Score
When applying for a mortgage loan through the big banks the approval criteria rests primarily on creditworthiness including your credit score (Beacon Score). Banks will also be looking at a yearly income that can easily be demonstrated. If you wish to be approved by a bank the credit score needs to be over 600. Credit scores can range from 300 which is considered very poor to 900 which is considered exemplary.
There are two major credit reporting agencies in this country, Equifax and Transunion. Regardless of which reporting agency we are referring to, their primary role is to assign a credit score to an individual based on several defined criteria. These criteria can be summarized as:
- Payment History- do you pay your bills on time?
- Utilization- how much do use your credit cards and how much do you maximize your revolving credit
- Length Of Credit History– how long have you had access to credit or are your accounts open
- Types of Credit Products- which represents the number and types of accounts held
From these criteria, your credit score is determined and allocated. It is important to note that a credit report is essentially a snapshot of your credit performance at any given time and there are ways to improve your credit score moving forward.
If you are working on a contractual basis or are self-employed it will also be difficult to convince the bank to loan out a mortgage because income becomes harder to easily demonstrate. By the same token if you approach a bank with a Beacon Score of less than a minimum of 600 you will likely be turned away.
There is the option of turning to credit unions or established trust companies, however, you will need to demonstrate a credit score of around 550 with a substantial down payment to be considered for a standard mortgage loan.
Under these circumstances, it is best to apply for a bad credit mortgage. What exactly is a bad credit mortgage?
Simply put, these types of mortgages are mortgage loans that are approved on criteria other than your Beacon Score or overall creditworthiness. Generally, these mortgages are shorter length mortgages with higher interest rates, set up fees, and closing costs than standard mortgages. These mortgage loans are offered by private lenders, either individual private lenders or a group of private lenders.
What is the Process of Obtaining a Bad Credit Mortgage In Ontario
Mortgage Broker Store works with a network of Private lenders based in Ontario and across the country. When applying for a bad mortgage loan in Ontario through a private lender(s) you need to follow a few simple steps:
- Research different lenders- Do your homework. Look around at your options. Then approach a private lender prepared so any pressing questions can be answered.
- Know the Equity in your house– Private lenders will be assessing the amount of equity you have built up and using this to determine the overall Loan to Value (LTV) of your property. A private lender will not accept loan requests exceeding 75% of the appraised value of your house. This represents an 75% LTV.
- Bring a recent appraisal of your property- When private lenders are assessing overall LTV, a recent appraisal will weigh heavily into their overall calculation of the final loan amount.
- Proof of Substantial Down Payment– Private lenders will likely require you to have a significant down payment when applying for financing. Bring proof of available down payment funds with you to your appointment.
- Any additional Assets– Demonstrating any asset you may have will also play a factor in determining the final loan amount and approval process.
- All Sources of Income– If you are not a full-time salaried employee bring any necessary paperwork demonstrating additional streams of income including any investment income, spousal and child support payments, and contract income.
A private lender will assess the above criteria and work with you to negotiate a loan on a short-term basis, usually between 1 to 3 years. Credit will not be an obstacle. During the bad credit loan if the credit score increases then terms can be negotiated at the end of the mortgage loan to reduce interest rates moving forward.
It is also possible to obtain a mortgage loan through a private lender with no credit, although this is more difficult. Regardless of your credit standing currently, it is always advisable to keep working on increasing your Beacon Score to qualify for the best terms on your loan. Pay your bills on time, put away money towards a larger down payment, pay off all high-interest credit cards, and make a list of your existing and future assets.
Mortgage Broker Store Can Help in Your Search for Bad Credit Loan Options
Mortgage Broker Store can help connect you to an appropriate private lander to meet your mortgage needs. We understand the needs of the borrower and we are always striving towards finding the best match when looking at your particular mortgage and financing needs.
We work with a network of private lenders across the country and are more than happy to guide you in important decisions that you will be making during the private lending process. To obtain a bad mortgage loan, feel free to contact us at your convenience. We will steer you in the right direction in your mortgage search.
For services in Cities and Towns across Ontario, please see below for more details:
Bad Credit Mortgages in Ontario
Even if you are having current credit issues there are still lending options open to you. As an Ontario homeowner or borrower you may have been turned away by the big banks or credit unions based on your credit score. Private lenders can help bridge this financing gap by providing you with different secured mortgage loan options. We will base the criteria of these loan applications on factors beyond your current credit score. By accessing any additional assets you have, looking at all sources of monthly income and assessing the appraised value of your home, private lenders can secure a mortgage loan to meet your short term financial goals.
Mortgage Broker Store can steer you in the right direction when applying for a bad credit mortgage. We have access to a broad range of private lending options, each with valuable experience and well established in the Province of Ontario. We will be able to address any questions you may have and work with you to solve your lending needs despite current credit issues. Learn more about how to obtain a Bad Credit Mortgage in Ontario
Debt Consolidation in Ontario
There is nothing worse than debt to provide ongoing worries. Multiple debt payments may give you sleepless nights. Ontario homeowners do have options to help navigate debt concerns. Rather than taking out another potential personal loan, look to utilizing existing equity built in your home to address ongoing financial issues. Even if your credit is damaged and the big banks may not be an option, there are many Ontario based private lenders that can work with you to take out a consolidation loan such as a home equity loan or Home Equity Line of Credit (HELOC). Don’t let credit issues dissuade you from taking the steps necessary to consolidate your multiple monthly debt payments into one monthly payment utilising funds that have built up on your property.
Mortgage Broker Store has access to a vast network of private lenders across the Province of Ontario that enables us to connect Ontario homeowners and borrowers with a private lender to address any credit issues while negotiating private mortgage loans. We will address any questions you may have and work with you to help you achieve your lending needs. Learn how to Consolidate Your Debt in Ontario
Home Equity Loans in Ontario
You have heard it before. Tap into the equity built up on your home. Why not try to consolidate your existing multiple debt payments and roll them into one monthly, easy to manage debt payment. By applying for a home equity loan, you are not only taking advantage of funds already built up in your property, but you can now look forward to one monthly payment with a lower interest rate than other high interest debt you may have including credit card payments.
Mortgage Broker Store can help you with any concerns you may have when applying for a home equity loan. We have vast experience in negotiating mortgage loans ranging from home equity loans to second mortgages, bridge loans and consolidation loans. With access to a vast network of private lenders across the Province of Ontario we will be able to connect you with a private lender to suit your needs and help you achieve financial peace of mind even if current credit issues have been a deterrent with other lending options. Learn more about obtaining a Home Equity Loan in Ontario
Second Mortgages in Ontario
When finances may be tight and credit may be a problem, looking into various lending options using your biggest asset can provide a sensible solution. Ontario homeowners can take advantage of existing equity in their home to take out a second mortgage loan secured against their property. If your credit score has been damaged as an Ontario homeowner you can turn to Ontario based private lenders to negotiate a secured second mortgage.
Mortgage Broker Store is here to help Ontario homeowners with any second mortgage applications. If the banks have turned you away we will be able to look to criteria beyond credit worthiness to help secure a second mortgage loan on your property. With a network of established private lenders across the Province, we will be able to work with you to tap into your home’s equity to take out a second mortgage. We will help free up money in your home to put towards immediate financial concerns such as home renovations, student loans or easing the strain of your primary mortgage. Learn how to get a Second Mortgage in Ontario
Private Mortgage lenders In Ontario
Ontario homeowners have a wide range of options when it comes to choosing a lender. Generally lenders will fall into 3 broad categories which include A lenders ( big banks), B lenders ( credit unions and trust companies) and C lenders ( private lenders). With increasingly stringent criteria imposed on Ontario homeowners when applying for mortgage loans by A lenders, many Ontario based borrowers turn to B lenders to apply for financing. If credit is in issue, however, these borrowers will not qualify for a mortgage loan. Don’t despair, private lenders will be able to negotiate loans based on other criteria including existing assets, all sources of income and the appraised value of your home.
Mortgage Broker Store is here to help Ontario homeowners with any mortgage loans that you may require, be it second mortgages, home equity loans, Home Renovations Lines of Credit (HELOC), bridge loans and consolidating loans. With access to a well established network of private lenders across the Province we will address your financing concerns and connect you with a private lender to negotiate mortgage loans to cover short term financial needs while you work to restore your credit. Learn more about Private Lenders in Ontario
Reverse Mortgages in Ontario
Ontario homeowners take pride in their homes. You have worked hard to pay off your principal over the years and look forward to owning your home outright. If you are 55 years or over your financial goals may have changed. You may also be in the enviable position of having paid off the principal of your mortgage loan or the bulk of it. If you are looking to pay for upcoming expenses such as possible home renovations, helping grandchildren or your adult children with finances, don’t take a personal loan, tap into the equity of your house with a reverse mortgage. Reverse mortgages can help you achieve peace of mind while taking advantage of the equity in your valued home.
Mortgage Broker Store can help you in your quest for a reverse mortgage. We are in the enviable position of having access to a vast network of Ontario based private lenders that will answer any question you may have. We will sit down with you and take you through the process of applying for a reverse mortgage. You have worked hard to own your home now make your home work for you. Learn more about Reverse Mortgages in Ontario
Stop Power of Sale in Ontario
If you have been late in mortgage payments and are currently in default of your mortgage loan, you may have found yourself in the midst of the process of Power of Sale on your home. Although there are legal issues to address, there are still steps that can be taken to possibly stop the Power of Sale going through on your home. Power of Sale still takes time and there are steps that your lender must follow in order to legally carry out a power of sale on your property. It is not too late to sit down with a private lender and take the necessary immediate steps to stop a power of sale going through on your home.
Mortgage Broker Store is here to help you in taking the steps to try to prevent a power of sale going through on your home. We have access to a broad network of private lenders across the Province of Ontario that are both experienced and well established. We will sit down with you, answer any question you may have while working with you to move forward on stopping a power of sale on your valued home. Learn more on how to Stop Power of Sale in Ontario