Banks can only approve mortgages for people with desirable credit scores. In Canada, a perfect score would be above 600 but that is not always possible for residents who have countless financial issues to consider. Low income and high debts leave many people helplessly looking for money to fill in the gaps that they have no chance to look at their own reports. Ignoring your credit score seems inconsequential only to discover how important it is when you need a loan. Our expert team has years of experience in setting up bad credit mortgages in Fort Erie.
Credit Score Requirements by Various Lenders
- Credit unions need 550 points
- Banks require a score of 600 points
- Private lenders do not consider a credit score
How to Check a Credit Score
The government requires that every citizen receives a credit score to show lenders how creditworthy they are. Credit reporting in Canada is the role of TransUnion and Equifax, credit bureaus that receive reports from lenders. It is important to check your credit score regularly if you are to avoid surprises when you need a mortgage. You can simply visit the credit bureaus’ sites or request a free copy from us but note that people with bad credit habits often display poor scores. The main purpose of organizations like Equifax is to develop a reference for lenders to use when they need to understand if borrowers are credible or not.
Bad Credit Lender Mortgages in Fort Erie
Bad credit mortgage lenders in Fort Erie accept a score below 550 when approving a mortgage. They are more interested in the debts against your property as it helps them determine if it is a worthy risk to take. Their main business is real estate which is why they are ready to help resident access all equity they have left in their homes. Our contacts in Fort Erie and other Ontario cities are such lenders who do not mind your credit score.
Criteria for Bad Credit Mortgage Approval
A major benefit of working with private mortgage lenders is that they don’t have to follow lengthy procedures or strict rules as banks do. Before approaching one, however, bear in mind that there is a set of approval criterion used to in choosing who to lend money. There is so much risk in offering credit to people whose scores aren’t too appealing but these lenders are ready to overlook this fact. To protect themselves, they charge high interest rates on mortgage and ask clients to pay administrative fees, legal fees, and home appraisal fees among other charges needed to process the mortgage.
To estimate a home’s equity a lender will need to see all your mortgaged so they can divide the total value by its current price in the Fort Erie market. This is done to get the property’s LTV or loan to value ratio which should be under 75% in ideal circumstances. If you fit the criteria and have a good annual income you may be able to negotiate better terms. These are not required to approve your request but go a long way in influencing how much the creditor offers.
Fees and Rates
It might seem surprising that private lenders charge so much interest but that is only an attempt to reduce risk. Banks only charge 2.7%-4% interest on mortgages but that is only because their clients are in good standings with the credit bureaus. In addition to interest rates reaching 15%, you must pay administrative fees to professionals involved in setting up the mortgage. Since the rules dictate that lender who went before get paid first, bad credit lenders must avoid expenses as much as possible in order to recover their investments as fast as possible. A wise borrower compares prices to get a good deal and to help you out we have a huge number of private lenders in our contact list who will compete against one another to give the best terms.
How to Mend Your Credit Score
It isn’t the end of the road when you realize that banks cannot offer you a mortgage with poor ratings. No matter how low your score may be, there are measures you can take to improve it. Use your credit cards sparingly and if possible, get a secured credit card. This unique credit card allows you to make a deposit to be used as security for the loan. While it is important that you don’t forget, the amount will cover your debt plus interest in case you do. These are simple steps whose results are noticeable in as few as 6 months.