Banks follow a strict mortgage approval process to identify risk posed by different borrowers. The most important aspect of this process is determining the borrower’s credit score and if it is too low, banks simply dismiss the mortgage request. Banks want to avoid serial defaulters at all costs because they would not like to be involved in lengthy legal processes of asset recovery. With these conditions, people with low credit scores have nowhere to turn. Bad credit mortgage lenders in Gravenhurst who do not mind how low your score might be. We know of many lenders offering bad credit mortgages in Gravenhurst, who we can connect you with for a mortgage when the banks turn you down.
Credit Scores Required by Different Lenders
- Private lenders do not consider credit score
- Credit unions require 550 points
- Banks need to see 600 points
How to Check Your Credit Score
Credit reporting in Canada is the job of two major bureaus; TransUnion and Equifax. These companies use special formulae to turn a credit report into a 3 digit figure that lenders can use to determine a borrower’s credit worth. Banks work very closely with credit unions meaning they can access your score at any time. You should regularly check your score as it is constantly updated according to your credit habits. Sometimes there may be errors in your report that if corrected would lead to a better score. If you often default on loans, miss payments or write bad checks, it is possible that you have a low score.
Bad Credit Lenders for Gravenhurst Mortgages
A score below 550 points is very disappointing for a person in need of a mortgage. Our bad credit lenders will provide mortgages at any score or bankruptcy, which lead to immediate dismissal by banks. We have a wide network of bad credit mortgage lenders in Gravenhurst who compete against each other to provide loans at the best terms to our clients.
Approval Requirements for Bad Credit Mortgages
Private lenders are in the real estate business meaning that they are more interested in your property than your income or credit score. Equity is enough for them to determine whether a mortgage applicant is a worthy investment or not. To estimate the risk posed by a property, the private lender will divide the mortgages by its current selling price to get the loan to value or LTV. This result must be below 75% to convince the lender that you own enough equity to sell. If you default, the mortgage agreement allows a bad credit lender to sell off the property but they have to wait until other mortgage lenders who came before them recover all their money. If a private lender dared lend against property with too much debt and the owner defaults, there might not be enough for them to recoup after the home has been auctioned.
Fees and Rates
To reduce the likelihood of a major loss, private lenders charge high interest rates and require clients to pay the lawyers, home appraisers, and other mortgage professionals. While banks lend at 3%-4%, private lenders’ interests could be 7%-15%. This is done as an attempt to recover as much of their investment as fast as possible before the borrower is unable to repay. They are ready to accept any reason you give for needing the mortgage because unlike banks, they do not have to bend to strict rules of mortgage processing. We have a network of bad credit mortgage lenders in Gravenhurst to help you get the money needed to improve your financial future.
How to Boost a Weak Credit Score
It takes commitment to get a negative credit score to desired heights. You must start by learning to make small charged to a credit card so that monthly fees become more affordable. Making sure that all debts are paid off on time is also a great way to boost credit score but there is more you can do. A secured credit card also goes a long way in protecting borrowers from the effects of late payments. To get a secured card you must make a deposit for the bank to use when your credit card payments are late. For the deposit to cover the money spent and interest, you should never exceed its 60% limit. If you stick to these measures, your score will increase in about 6 months