Large institutional lenders, such as banks, require high credit scores to provide mortgages. For people with credit scores below 550, getting a bank mortgage will not be possible. We help people find private lenders that offer bad-credit mortgage loans in Hamilton.
The Different Scores Needed By Different Lenders
- Canadian banks look for a credit score of at least 600
- Trust companies look for a credit score of at least 550
- Private lenders can offer mortgages in Hamilton without looking at credit score
How to Get a Copy of Your Credit Score
Banks and registered lenders access credit scores generated by Canadian credit bureaus TransUnion and Equifax. Our mortgage brokers are registered to pull credit reports, and we provide free copies to clients. You can also request a copy of your credit score directly from the websites for TransUnion and Equifax. If you’ve failed to pay bills, have too much debt in general or have gone through bankruptcy or consumer proposal, then you will have a low or poor credit score.
Lenders That Provide Bad Credit Mortgage Loans in Hamilton
If your credit score reports show that you have a score of less than 550, you will need bad credit mortgage loans in Hamilton from a private lender. These private lenders can provide a mortgage regardless of credit score. Banks will also refuse to provide mortgages for people who have gone through consumer proposals or bankruptcy. We have connections with many private lenders and have been able to service many clients seeking bad credit home loans in Hamilton.
Bad Credit Mortgage Requirements
A private lender will consider the home equity and secured mortgages on a property when approving a mortgage. To reduce the risk associated with bad credit mortgages, lenders will reject properties with too much existing debt. By setting up the loans as registered mortgages, a lender can legally sell the subject property if mortgage fees are not paid.
When a lender sells a property, they may recover their funds after paying off all existing mortgages. To determine if a mortgage is too risky, lenders will calculate the Loan-to-Value (LTV) of the property. LTV is calculated by taking the existing mortgages on a property and dividing them by the predicted selling price of the property. For the city of Hamilton, bad credit lenders are willing to give mortgages on properties that do not exceed 80% LTV. People with a better credit score or a high income may be able to negotiate lower interest rates, but these factors will not help a mortgage applicant get approved.
Costs Associated With Bad Credit Mortgages
Lenders providing bad credit mortgages will charge larger interest rates than banks since a bad credit mortgage is a risky investment. Most Canadian banks will charge interest rates of 3% to 4%, and most private lenders will charge rates between 8% and 12%. Private lenders will also ask for payment upfront in order to set up the mortgage. The lenders must pay fees for administering the mortgage, the real estate lawyers, and the home appraisal company. It’s advisable to request quotes from multiple private lenders and compare their offers. Our brokerage has connections with many lenders that service Hamilton and can provide you with several offers from different lenders.
How to Fix Your Credit Score
In order to fix your credit score, you must pay off bills and credit cards on time. Avoiding excessive debt reduces interest payments and makes it easier to pay off the balance. To quickly improve your credit score, you need to pay off all the monthly charges on your credit card. Place small charges on the card for easy payoff, or sign up for a secured credit card at a bank.
Secured credit cards are available at all major Canadian banks. To get a secured credit card, pay a deposit used if you miss payments. Keep card usage below 60% of its limit to reduce the risk of missing payments.
If you consistently pay off all credit card fees, your credit score will improve in six months’ time. You can also ask your bad credit mortgage broker for suggestions to improve your credit score.
Qualifying for a Bad Credit Mortgage Loan in Hamilton
Many people with bad credit have a difficult time qualifying for a mortgage. A bad credit mortgage broker can help a person improve a poor or low credit score. Ask if another property can be collateral or if someone can co-sign. Try all options; free credit counselling may help.
Mortgage Broker Store can help connect an Ontario homeowner to an appropriate private lender to meet home equity loan needs. Continually strive to find the best match when looking at your particular mortgage and financing goals. We work with Ontario private lenders, guiding you through crucial decisions in the lending process. We will steer you in the right direction in your mortgage search.