Every bank and institutional lender in Canada requires a set credit score to decide whether a certain client is worthy of credit. A score of 550 or more is sufficient for credit unions but banks require even higher scores. Anything below to 550 is considered a poor credit score, which is risky for financial institutions. Only private lenders can offer loans to people with bad credit and we help link the two parties. We have a wide network of private lenders offering bad credit mortgages in Collingwood.
Credit Scores Needed by Different Lenders
- Canadian banks require 600 points
- Credit unions in the country must see 550 or more points
- Private bad credit lenders do not need to see credit scores in order to approve or reject applications.
How to Get Your Score
Banks can easily pull your credit score from the main credit bureaus in Canada, Equifax and TransUnion. Our firm also does credit reporting and can give you a copy or just request one from any of the leading bureaus. If you have been bankrupt, take more debt than you can repay or delay bills your score is most likely a poor one.
Private Lenders Offering Bad Credit Mortgages in Collingwood
Upon discovery that your credit score is below 550, you know that only private mortgage lenders can help. Collingwood’s bad credit mortgage lenders do not care about a borrower’s credit score, bankruptcy, or consumer proposals. We have a network of private lenders that provide mortgages for people with bad credit in Collingwood.
Requirements for Bad Credit Lender Mortgages
Private lenders of bad credit mortgages will look at existing debts on a property as opposed to credit score. Bad credit mortgages pose an inherent risk and in order to protect themselves, bad credit mortgage lenders avoid properties with too much debt. A mortgage agreement signed by these lenders allows them to sell off property whose fees are not cleared. After selling the property, a lender must ensure that other mortgage holders are compensated before claiming any money. To gauge property risk, a lender must assess its LTV or loan to value ratio. This can be done by calculating the total value of mortgages then dividing the result with the most current price of the home. A home whose total debt value is $800,000 and a selling price of $1,000,000 will, therefore, have a loan to value ratio of 75%, the maximum that a private lender allows. Bad credit mortgage lenders in Collingwood can offer good interest rates if an applicant has a better credit score and better income than other borrowers do.
Interest Rates and Fees for Bad Credit Mortgages
Banks normally offer mortgages at 3%-4% interest but that is only because they choose the most creditworthy borrowers to work with. Private lenders, on the other hand, choose to work with very risky clients who could easily default the mortgage. This is why most bad credit mortgage lenders charge very high interest between 7%-15% and require clients to pay the mortgage set up fees. This can be very expensive considering the number of professionals involved including; home appraisers and lawyers whose fees are quite high. Before accepting any deal, though, it is important to shop around to get fair rates for your bad credit mortgage.
How to Increase Your Credit Score
Paying off all your credit cards and utility bills will certainly spike your credit score. To speed up this process you should always pay bills on time as experts agree that credit cards can be great tools for improving credit scores but only if monthly debts are paid on or before the due date. It is advisable to put only small charges on a credit card, as these are easy to pay off.
Another way would be to ask your bank for a secured credit card which will also help in improving your score. To get this card you must put down a deposit, which will be used to pay your debt once overdue payments are generated. This will certainly save you from getting in bad books with credit bureaus and if done consistently the credit score will increase in a minimum 6 months period. It might take longer depending on how low the score was but when you get to the desired levels, it will be easy to get a bank loan with low interest. Meanwhile, we can connect you to our network of private mortgage lenders offering bad credit loans in Collingwood.