Banks and credit unions demand that a borrower has a credit score above 550 points before they can entertain their loan requests. They are very careful to issue loans only to people who will repay in full as they want to avoid lengthy legal matters in the event of default. The only way these institutions can learn about your credit habits is through your credit score which serves as an indicator of whether you are a good borrower or not. If your score falls below the accepted minimum, you can only look to lenders that might be willing to offer bad credit mortgages in Belleville.
Scores Demanded by Different Lenders
- Credit unions need 550 points
- Banks require 600 or more points
- Private lenders do not need a score
How to Get Your Credit Score
If you want to know where you stand with lenders, visit TransUnion and Equifax official sites for your personal copy. These are the leading credit reference bureaus in Canada whose task is to write each citizen’s credit report which contains a credit score according to their borrowing and repayment habits. Banks and credit unions have authority to get their clients credit report directly from the bureaus in order to make informed lending decisions. If you don’t want to pay to get your credit score, we can get it on your behalf for free.
Private Lenders Offering Bad Credit Mortgages in Belleville
Credit score requirements are a clear sign that private lenders are the only solution for people that want mortgages but are hindered by poor credit history. They are not deterred by poor credit, consumer or bankruptcy proposals because their focus is in real estate. We work with many such lenders in Belleville to give clients easy access to bad credit mortgages.
Requirements for Bad Credit Mortgages
Bad credit mortgage lenders are often private companies who understand that accessing equity in a property would be a great way of achieving one’s financial dreams. Before approving your loan, though, private lenders must understand how much equity you own. This protects them from the possible loss but it also ensures that they are able to profit from the property. Private lenders prefer registered mortgages which ensure that they have a right to sell your home if you are unable to honor your debts. Without enough equity, even private lenders will reject your application as it means they might not be compensated if you default. This is prompted by a rule that requires debts against the property to be paid from the first to last mortgage lender.
To measure equity, one has to figure out the loan to value ratio of property. If the get a score of 75% or less after dividing total mortgages by current selling price of the home in that area, a private lender will approve your loan. Anything above that shows that you own too little equity for private lenders to benefit.
Bad Credit Mortgage Fees and Loans
Issuing bad credit mortgages is risky business as chances are high that the borrower will be unwilling or unable to repay. Rather than stay out of the scene, private lenders charge high interest rates and extend administrative, legal and appraisal fees to the customers. They have to do this to avoid losses that could occur in the case of default. While banks offering bad credit mortgages charge between 2.7% and 4%, private lenders give out loans at 8%-15%. To get the best deal you should look around the market for a lender whose terms are applicable to your situation but finding them isn’t always easy. To help you out, we have a large network of private lenders in our contact list that are ready to serve clients in Welland, Cornwall, Sarnia, Belleville and other cities in Ontario, Canada.
How to Improve Your Credit Score
It takes years to build a credit score but only takes a few mistakes to damage it. Missing credit card payments, failing to honor bank loans and late payments are just some reasons for a low credit score. This may lock you out of bank loans but there is no need to fret as gradually, you can restore your score to new heights. If you rely on credit cards, learn to make only small purchases using them and pay up before deadlines. To protect your score you can use a secured credit card. This is issued by banks to people who need to ensure that their credit card debt will be covered even if they forget or are unable to pay that month. It is advisable to stay within the 60% limit to make sure that the deposit is sufficient.