Bad credit mortgages are given to individuals with a poor credit score that is not acceptable by leading banks. These people have to turn to private lenders who are usually willing to negotiate mortgages for clients without paying attention to their credit scores. We help people in this situation find such private lenders who provide bad credit mortgages in Innisfil.
Credit Score Requirements
- To apply for a bank mortgage you must have 600 points
- Credit unions need to see a score of 550 points or more
- Private lenders do not need to see a score
How to Check Your Credit Score
Banks and credit unions can pull your score directly from the credit bureaus in Canada. Individuals who need to know their score should visit TransUnion and Equifax websites where they can pay for their reports. Since we also do credit reporting, Ontario residents who want to avoid these charges can reach us for a copy. If you have poor credit handling habits it is almost obvious that your credit report will show a poor score. Credit reports are particularly important to lenders who use them as a reference when making mortgage approval decisions.
Private Lenders Offering Bad Credit Loans in Innisfil
If you receive the report and it shows a low score, and you need a mortgage only private lenders can help you out. To reduce the risk involved these lenders must avoid lending on properties with too much debt. They prefer registered mortgages which allow them to sell off property when their clients fail to repay but there is a catch. The Ontario Mortgage Act dictates that prior mortgages on the property must be cleared before the private lender can make their claim. Borrowers must understand the importance of repaying loans not just so they can get good loans but also as a way of building a good reputation in the business. We have a large network of private lenders in Innisfil who can provide bad credit mortgages for residents.
Requirements for Bad Credit Mortgages
Instead of credit, private lenders focus their attention on a property’s debts and current sale price. They must reduce inherent risk and so they avoid lending against property with too much debt. Their intention is to calculate loan to value ratio in an attempt to understand just how much risk a piece of real estate carries. This is done by dividing total value of loans with the price to get a value that should not exceed 75%. LTV above that shows that an individual commands very little equity for them to bring good business. The aim of private lenders is to profit from your home but if there are too many debts on it, chances of profits are indeed slim.
Interest Rates and Fees for Bad Credit Mortgages
Bad credit borrowers must contend with high rates charged by private lenders who need to mitigate risk. 7% to 15% is the common rate among different private lenders who will also charge legal, home appraisal and administrative fees to avoid losses if you default on payments. To get the best rates you should seek out as many lenders as possible but remember that the interest rates cannot be below those offered by banks (3%-4%). We save you the trouble by sending over several quotes from multiple lenders in our network.
How to Strengthen a Weak Score
You can turn a bad credit situation around using the very tools you use to get loans. Credit cards are popular among consumers but the biggest mistake is charging hefty purchases on them. Credit card interest is very high so making large purchases on the card leaves a possibility that you will be unable to repay on time and in full which will definitely reflect poorly on the credit report. The bad credit lenders could also help you build a good score but only of all mortgage fees are paid according to the agreement. Banks issue secured credit cards with a deposit to cover credit card debt in the event that a customer misses important payments. According to experts, you must not spend beyond 60% limit set to ensure that the amount deposited actually covers the debt. You will be rewarded for your efforts with an improved score after six months of commitment.