Banks and other lending institutions usually require an individual to meet a certain credit score before being offered a mortgage. A bad credit mortgage simply means a mortgage that is accessible to homebuyers with low credit score. Most banks in Cambridge have a credit score of 550 and above. For this reason, you will find private lenders in Cambridge who specialise in providing mortgages to individuals with poor credit ratings. Our team has been able to help many of our clients get bad credit mortgages in Cambridge.
Credit scores that different lenders require
- Most banks require a credit score of at least 600, before issuing a mortgage.
- Trust companies only require one to have a credit score of at least 550.
- The private lenders do not require credit score while issuing their mortgages.
How to Check Your Credit Score
In Ontario, the banks generate your credit score from Equifax and TransUnion, Canada’s major credit bureaus. We can also produce for you the credit score and issue you a copy of your credit report upon your request. Also, you can visit the credit bureaus websites and request for your credit score. Anyone who has a history of failing to repay his/her debt likely has a poor credit score.
Private Lenders Providing Bad Credit Mortgages in Cambridge
Private lenders are individuals or companies who offer mortgages to individuals whose credit score is below 550. Cambridge private lenders do not consider your credit score while approving your bad credit mortgage. They offer bad credit mortgages to individuals around Cambridge and also in most of the Ontario cities. If you have a poor credit score try using a private lender, since issuing bad credit mortgages is their specialisation.
Requirements for Private Lender Mortgages
To qualify for a bad credit mortgage, some requirements are set by private lenders. One of the primary requirements is a low loan to value ratio. A loan to value ratio is the home’s mortgage divided by its selling price. The ratio must be no greater than 75% for your bad credit mortgage to be approved. Private lenders consider the ratio so as to reduce the risk inherent in that mortgage. Rarely will the lenders lend on houses whose debt is too high, since the risk associated with the property is also high. If your income or credit score is high, the private lenders will offer more favourable interest rates.
Interest Rates and Fees for Bad Credit Mortgages
Due to the high risk associated with the bad credit mortgages, private lenders tend to charge higher interest rates and fees than banks. These lenders charge higher so as to help them compensate for the high risks associated with this type of loan. The high interest and fees serve as their security. In most cases, you will find banks in Cambridge charging an interest rate of 3% to 4% on mortgages, while private lenders charge an interest rate of 8% to 15% on bad credit mortgages.
Bad credit mortgages also involve a set-up fee together with an administrative fee which is paid to the private lenders for their services and processing your mortgage. A lawyer will also be hired to help in the processing of the paperwork. While the processing is still ongoing, you will also have to pay another fee to the to a property appraisal company. Cambridge city has many private lenders from which you can acquire a bad credit mortgage at an affordable price. We can help you get many quotes from private lenders and help you select the best deal among all the different offers.
How to Repair Your Credit Score
The best way that you can improve and make your credit score better is simply by paying your bills and credit cards on time. Paying your monthly debts on time guarantees you a better credit score since in most cases you use your credit cards. It is advisable that you learn to put only small charges on your credit card so that it will always easy for you to pay off.
Most of the banks in Cambridge provide secured credit cards, but to acquire one you will need to deposit some amount of money for use when you fail to pay some dues. It is also advisable that you pay all your fees on time and not to exceed 60% of the set credit limit. Following these guidelines will only take you six months to repair your credit score.