Banks in Canada need a high credit score in order to approve loans. A credit score is a number obtained from credit bureaus and is used by lenders to make lending decisions. The credit score in Canada could be as low as 300 or as high as 900 points according to your credit habits. People with a low credit score cannot enjoy loans from banks and credit unions, which are very wary of risk. If you have a poor score, your only help can come from lenders who do not care about your credit score. We have many lenders in our contact list, who are willing to offer bad credit mortgages in Bracebridge to our clients with poor credit ratings.
Credit Scores Needed by Different Lenders
- Private lenders do not ask to see credit score before approving your loan
- Trust companies require 550 points
- Banks will not work with any figure below 600
Getting Your Credit Score
Banks are allowed to view your credit score whenever they want by contacting the credit reference bureaus. Individuals should also contact Transunion or Equifax to find out their score and correct any errors. It is not known exactly how credit bureaus calculate credit score but you obviously need to honor debts for it to be high. Our brokerage company also does credit reporting so feel free to ask us for one. It takes about three weeks to get your credit report from the bureaus but you can also pay a fee to speed up the process.
Bad Credit Lenders for Bracebridge Mortgages
Do not give up your search for a mortgage if your score is below 550. Our bad credit mortgage lenders in Bracebridge will give you a loan anyway but only if you meet their approval criteria. They might not care about bankruptcy or consumer proposals either but bad credit lenders have a way of separating borrowers who are worthy of credit from those who cannot afford it. We have a wide network of private bad mortgage lenders in Bracebridge and other Ontario cities.
Bad Credit Mortgage Approval Criteria
You need to present enough equity to qualify for a bad credit mortgage from a private lender in the city. To estimate this, a private lender must calculate the loan to value of a property by dividing the value of loans secured against it with the current selling price. If a house costs $1 million and has 600,000 worth of mortgages, it has a loan to value (LTV) of 60%. Bad credit lenders will work with a maximum LTV of 75% as anything more means there isn’t enough equity for the creditor to profit from.
Bad credit lenders hope to make money from real estate but without enough equity, the prospects of that would be very low. The mortgage agreement allows a lender to sell the property in default but restricts them from taking all proceeds because mortgage holders who went before must be paid first. If a house has too much debt then private mortgage lenders will dismiss it as a bad investment idea. If you are approved and have a high income, try negotiating for better interest rates. It is wise to compare prices among lender to land the best deal. We can help you with that by sending over multiple quotes from the bad credit mortgage lenders in Bracebridge.
Bad Credit Mortgage Fees and Rates
If you decide to get a bad credit mortgage then you have to contend with interest rates of 7%-15%, which is very high compared to banks, which lend at 3%-4% interest on mortgages. This is all in an attempt to protect their investments from the high risk posed by clients with very low credit scores. In addition to the interest, you also have to pay for legal work and home appraisal among other fees needed to process your mortgage.
Improving Your Credit Score Over Time
Consistently paying your bills will certainly lead to a higher credit score but you could help matters by paying credit card debt and loans without fail. Some people resort to secured credit cards, which have a deposit to cover the debt in case you forget. Secured card best practices include; paying the charges and staying within the 60% limit. It generally takes 6 months to improve a poor score but that depends on what score you previously had.