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 based on their borrowing and repayment habits. Banks and credit unions have the authority to get their client’s credit reports 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 on 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 possible losses and 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 honour your debts. Private lenders will reject your application without enough equity, risking no compensation if you default due to payment priority rules. To measure equity, one has to figure out the loan-to-value ratio of property. A private lender will approve your loan if total mortgages are 75% or less of the home’s selling price. 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 as borrowers may be unwilling or unable to repay. Private lenders charge high interest rates and extend administrative, legal, and appraisal fees to 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% to 15%. Find a lender with terms that suit your situation to get the best deal, but it’s not always easy. We have private lenders ready to serve clients in Welland, Cornwall, Sarnia, Belleville, and other Ontario cities.
How to Improve Your Credit Score
It takes years to build a credit score, but it only takes a few mistakes to damage it. Missing payments, failing loans, and late payments are reasons for a low credit score. It may block bank loans, but you can gradually 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. Issued by banks to ensure credit card debt is covered if users forget or can’t pay that month. It is advisable to stay within the 60% limit to make sure that the deposit is sufficient.
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.