Many mortgage lenders use credit scores to determine whether or not to provide a mortgage. Banks check your credit report to establish your creditworthiness, but unfortunately, that prevents many people from accessing money tied up on their property. Unlike banks, private lenders turn a blind eye to poor credit scores to issue bad credit mortgages in Caledon, Ottawa, Mississauga, and other parts of Ontario.
Credit Scores Preferred by Various Lenders
- Banks require 600 points or more
- Credit unions will approve a score of 550
- Private lenders do not check your score
How to Get Your Credit Score
The leading credit reference bureaus in Canada are TransUnion and Equifax. Their primary role is to develop a credit report for each adult citizen based on their borrowing and repayment habits. This information is obtained from lenders who share such information to protect others from serial defaulters. Banks and lending institutions can pull an individual’s credit report to assess the risk associated with them. You can also get a copy free, but the credit bureaus will charge you for the service. If you want to avoid such costs, you can contact us to get it on your behalf.
Private Lenders Offering Bad Credit Mortgages in Caledon
Credit score requirements by different lenders clearly show people with bad credit that they can only turn to private lenders in Caledon. The city’s bad credit mortgage lenders do not care much for your credit score. We work closely with a network of such lenders in Caledon and other Ontario cities to help residents access loans against property.
Requirements for Bad Credit Mortgages in Caledon
Private mortgage lenders in Caledon care more about the equity you own than your credit report. By calculating the Loan-to-Value (LTV) ratio, they can tell how much of the property you own to approve or reject your mortgage approval. Borrowers with too much debt secured against their homes are unlikely to qualify because it means that the lender might not get paid in case things go wrong. As the rule says, the first mortgage must be paid before other lenders can get their cut. This means that with too little equity, borrowers will be unable to repay the debt.
The loan-to-value ratio is calculated by dividing debts by the appraised property price. If the result is above 75%, the borrower only has 15% equity in their home, which means that private lenders might not approve their applications. If you have favourable equity and a credit score that is not too far from 550, private lenders will definitely consider charging you less interest.
Fees and Interest Rates
Bad credit mortgages are high risk even for private lenders who resort to charging 8-15% interest. You’ll pay appraisal, legal, and administration fees as private lenders minimize expenses. Different private lenders have unique rates, so shop around to find the one offering the best terms in your area. We have strong ties with private lenders in Caledon, so let us help you find the best mortgage product.
How to Improve Your Credit Score
People who do not want to damage their credit scores often use secured credit cards. They place a deposit on these cards and make sure that they never spend more than 60% percent of the set amount. This way, the bank can simply take their cut from the deposit if you are late with the payment. If you do not have a secure card, you can improve your score by developing proper habits. Charge small purchases on your card and always pay in full and in time to gradually build your score.
Bad credit mortgages can improve ratings, but timely payments are crucial as private lenders report to credit bureaus. Positive actions take time to reflect on your report, but you’ll reach the desired 550 score with patience. Changes take about six months to show, and a good report ensures access to credit from preferred lenders.