Banks in Canada can only approve mortgages for people with high credit scores. They need a score of 550 or more to consider applications. Unable to go to institutional lenders people with poor credit scores turn to bad credit lenders. We help our clients by connecting them to lenders that offer bad credit mortgages in Halton Hills.
Credit Score Requirements For Various Lenders
- Banks need 600 points
- Private lenders don’t consider credit scores
- Credit unions will work with at least 550 points
Checking Your Credit Score
Canada’s top credit reference bureaus are TransUnion and Equifax whose role is to create credit reports based on how individuals repay loans. Banks can request a copy from the bureaus as can individuals but we have the ability to pull reports for our clients without charging them. You do not have to visit the credit bureau offices as these companies have working websites where people can retrieve their credit reports. If you often default on loans, it is possible that you will have a poor score, which will prevent you from accessing bank and credit union mortgages. Lenders report to credit bureaus to protect other lenders against people who often default on loans.
Bad Credit Lender Mortgages in Halton Hills
It is only possible to get a mortgage from private lenders with a credit score below 550. Bad credit mortgage lenders in Halton Hills can give you a loan without considering your score, consumer proposals, or bankruptcy. They are interested in home equity that shows whether an individual is able to compensate them. Private mortgage lenders hope to make profits from real estate so it appeals to them when they can earn interest and fees on mortgages. They understand that even with a poor credit score, one might have enough equity, which to them is enough. Our contacts in Halton Hills and other parts of Ontario will readily offer bad credit mortgages to those who need them most.
Criteria for Bad Credit Mortgage Approval
Private lenders unlike banks, look more at existing debts than credit when making a decision to lend. They are very sensitive to risk, which is why they avoid giving loans to the property with too much debt. They prefer registered mortgages, which allow them to sell property whose owner defaults. Once the sale is complete, prior mortgages must be repaid before the private lenders can recoup their funds. When assessing risk, a lender must calculate the Loan to Value ratio. To get the desired result you must divide existing debts by the property price. Halton Hills lenders will give loans against property whose LTV doesn’t exceed 85%. People with high annual income coupled with a good credit rating can negotiate better mortgage terms but these are not mandatory requirements among private lenders. You must also repay bad credit mortgages in Halton Hills in time as missing these is also detrimental to your final credit score.
Fees and Rates
With high risk associated with bad credit mortgages, private lenders charge 8-15% while normal bank loans are given at 2.7%-5% in Canada. Private lenders do this to cushion themselves from losses in case of default. They also need clients to cover fees required by appraisers, lawyers and set up the mortgage. It is important to compare prices before settling on any private lender. In Halton Hills, we give our clients multiple quotes from private lenders in our network so they can make a quick decision. These are qualified lenders with experience in the market and that goes a long way in connecting people with the most appropriate product for their situation.
Steps to Improve Your Credit Score
You must consistently pay off credit cards and bills to increase your score. Placing small charges on your card means that you will be able to pay when the time comes. A simpler way of improving your score is choosing secured credit cards. These are issued by banks to people who want assurance that missing payments will not harm their scores. When you place a deposit on the card, it is considered as a limit, which must not be surpassed so that it can cover your debt during emergencies. If you always repay debts on time and in full your will be updated to reflect this in six months time.