The only way your mortgage request will be approved by credit unions, banks, and institutional lenders is if you have good credit. They need to work with highly rated customers who are not a default risk because they are under strict government regulations. Banks and lending companies also want to avoid the lengthy recovery process when a borrower actually defaults on a mortgage. In a bid to get the most creditworthy borrowers, banks need a whopping 600 points to approve any mortgage. Those whose score isn’t convincing have to turn to private lenders offering bad credit mortgages in Grimsby.
Scores Needed by Different Lenders
- Banks will only approve at 600 points or higher
- Credit unions must see nothing less than 550
- Private lenders will not ask to see your credit score
How Can you Find Your Score?
Lenders keep records of their clients including when they borrow, repay, interest rates and other details that credit bureaus require. If you happen to take a loan and fail to meet set terms, this will reflect badly on your score. Equifax and Transunion are the main credit reference bureaus in Canada where most lenders report. If approached for a loan, banks and credit unions will simply pull a customer’s report, analyze their score and determine whether they qualify. Individuals can also get their personal reports but for a fee. We also do reporting so you can call us whenever you need a free copy.
Bad Credit Mortgages in Grimsby
Private lenders accept low scores because their main interest is in real estate profits. It is for this reason that they put equity above everything else when approving or denying loan requests. Our contacts in Grimsby always provide bad credit mortgages to those that are turned down by banks. Bad credit mortgages in Grimsby help homeowners cover bills, pay taxes and cater to personal expenses that banks may not allow. The private lenders give people a chance to rebuild their scores so that they may access any credit facility they want in future.
Criteria for Bad Credit Mortgage Approval
The main reason why private lenders attract many customers is that they are not too rigid about the rules. They must reduce risk, though, which is probably why they have to measure the loan to value ratio before making a decision. This is obtained by dividing the total value of loans secured by property by price to get the desired 75% or less. In this case, a borrower has 15% equity in their home which is considered viable by private lenders who prefer registered mortgages.
This allows them to sell off your property in the event that you cannot pay the fees. The mortgage rules also demand that lenders be paid in order of who came first so lending against property with a very high loan to value ratio would be impractical. Lending to people with bad credit is a risky affair that all private lenders must be cautious about.
Fees and Rates
Rates may differ from one private lender to another making it important to compare. They generally charge 7%-15% which is very high in comparison with banks but that is understandable considering their clients. Private lenders will ask your reasons for needing the loan but will accept any explanation because they are more flexible than banks. You must be committed to repaying though as missing payments will deprive you of a good credit score. If you need a mortgage, you can rely on multiple quotes from our network of bad credit mortgage lenders in Grimsby.
How to Mend Your Credit Score
This can be done in several ways including making small charges on a credit card, taking a secured credit card or bad credit loan among other forms of debt. Credit card interest is very high but with the right strategy, you can use them to your advantage by never using much more than you can repay. The key to a positive credit score is in honoring all the terms including payment deadlines, interest amounts, and other factors. This will reflect positively in your monthly credit reports, eventually improving your overall score in 6 months. Once you achieve desired credit points it becomes possible to get high loan amounts for low-interest rates to make your dreams come true.