Banks operating in Canada can only approve mortgages for people with credit scores above 600. Trust unions will negotiate mortgages with people whose score is at 550 but for any figures below that only private lenders can help. We connect our clients our clients with lenders that offer bad credit mortgages in Cornwall, giving them a chance to utilize their assets to achieve their financial goals.
Credit Scores Required by DifferentLenders in Cornwall
- Banks – 600 points
- Credit unions – 550 points
- Private lenders – no credit score needed
Checking Your Credit Score
Banks can easily get your credit score from the leading credit unions in Canada; Equifax and TransUnion. Our team can also give you a copy but it is possible to get it from the credit bureaus for a fee. Your credit score will definitely decrease if you take more debt than you can afford, go bankrupt or fail to pay your bills. Lenders across the city report on their clients to credit bureaus to create a reference for other in the industry. They can rely on this information to decide on ideal candidates for different types of credit.
Bad Credit Lender Mortgages
Once you discover that your credit score is below 550, you know that only private lenders will help you get a mortgage. Bad credit lenders that serve Cornwall can provide mortgage the credit score notwithstanding. Our lenders offer bad credit mortgages in other parts of Ontario including Aurora, Sarnia, and Cornwall.
Criteria for Bad Credit Mortgage Approval
Instead of looking at credit to approve a mortgage, a private lender will be keen to see existing debts and sales value. They are such risk sensitive lenders that they will not issue mortgages on the property with too much debt on it. They also provide registered mortgages which permit them to sell the property if a borrower fails to pay. After selling the property a bad credit mortgage lender can only recover their money if other lenders that went before are fully paid.
When evaluating the risk a lender has to measure a property’s loan to value ratio by dividing existing mortgage value by the selling price. Cornwall lenders have a maximum limit of 80% LTV and those with high incomes or relatively good credit scores can negotiate better interests. Loan to value ratio above 80% shows that you own too little equity for the lenders to profit from offering you a mortgage. Income and a good credit score are not however required by private lenders when considering loan applications.
Fees and Rates
Traditional banks charge between 2.7% and 4% interest while private lenders go way above that to charge 7-8% interest. In addition to these high rates the customer is left to take care of home appraisal, legal, and administrative fees required to set up the mortgage. Lending to people with bad credit is risky because there is not telling whether this time clients will be able to pay. Lenders must, therefore, be assured of profits after giving you a chance to access the equity attached to your home. The lender may require information on how the loan money will be used but being flexible they will accept whatever explanation you give. Borrowers can use money from a bad credit mortgage to pay for living expenses, tuition or home renovations as long as they promise to pay on time.
Tips to Help you Improve Your Credit Score
Everyone dreads a bad credit rating as it means they cannot access competitive credit products offered by banks and institutional lenders. It takes a while to build your score to desirable levels and it is disheartening when the number starts to fall. You can still recover though by making better use of your credit card and duly paying the debt as required. Avoid charging large purchases on your credit card as it might be difficult to repay. If you often forget to repay on time you should consider getting a secured card. This is a special way to improve a credit score as the amount deposited acts as security for the debt. You shouldn’t use more than 60% of this amount to make purchases as you need the deposit to cover interests which can be high for credit cards. It takes about 6 months for positive behavior to reflect on your score so be patient as you borrow and repay diligently.