Institutional lenders and banks require high credit scores in order to approve mortgage applications by clients. A score of 550 or above is a good indicator that applicants usually pay off debts in full and in time. Poor scores show that the client is a high credit risk and therefore not worthy of a loan. This is a bleak situation for anyone whose score falls below 550 but they still have us as an alternative source of private lenders who can furnish their mortgages despite damaging credit scores. Our team has years of experience in providing people with bad credit mortgages in Kawartha Lakes.
Credit Scores Required by Different Lenders
- Private lenders don’t need a credit score
- Banks need to see upwards of 600 points in order to consider applications
- Trust companies look for a minimum of 550 points to qualify mortgage applications
How to Get Your Credit Score
You can visit the TransUnion and Equifax official websites and pay a fee to receive a copy of your credit report. Banks and trust companies can easily pull your report from the two main credit bureaus in Canada but with our help, you can get a free copy.
Private Lenders Offering Bad Credit Mortgages in Kawartha Lakes
From the credit score requirements by different lenders, it is easy to establish that people with poor ratings can only get help from private lenders. Kawartha Lakes’ bad credit lenders do not dwell so much on your credit score, bankruptcy or consumer proposals as to them it does not affect equity owned. We work closely with a vast network of private lenders in Kawartha and other parts of Ontario in a bid to connect people with ideal, affordable bad credit mortgages.
Requirements for Bad Credit Mortgages
Instead of focusing on your credit ratings, private lenders in Kawartha Lakes concentrate on existing debts on the property. This helps them assess the risk on homes or commercial real estate before deciding on whom to lend. Obviously, these lenders will not give out loans against property with too much debt baggage as it only increases the risk. If a borrower is unable to pay off mortgage debt, bad credit lenders want to make sure that they will get paid even after all other lenders have been paid.
To assess the risk, private mortgage lenders will always calculate loan to value ratio. Dividing the total value of debts on a property by its current selling price will give you the LTV. From that result, a potential lender can determine whether the borrower owns enough equity to make them eligible for a loan. Bad credit mortgage lenders in these parts will offer loans on property with maximum LTV of 85%. Applicants with a steady income or relatively high scores might get better interest rates but bear in mind that these are not approval requirements.
Fees and Interest Rates for Bad Credit Mortgages
Bad credit mortgages pose a higher risk than normal mortgages which is why private lenders charge between 8-15%. Additional charges include legal, appraisal, and administrative fees required to set up the mortgage. With this in mind, you need to compare different lenders to make sure that they get the best possible terms on their bad credit mortgages. Our strong connection with many lenders in Kawartha Lakes, we can send our clients several quotes from different lenders who service that region.
How to Improve Your Credit Score
Pay your monthly debts in time to increase your credit score. If you use credit cards, make sure that all outstanding debts on them are paid in time so this can reflect positively on your credit report. You should only make small charges on your credit card as those are easy to pay off but it is also possible to improve your score by requesting a secured card.
Top Canadian banks issue secured credit cards to prevent a situation in which clients are affected by late payment. To get this card, one must make a deposit meant to cover credit card debt in case the client misses a payment. If you really want the secured card to improve your score, it is best that you never pass the 60% limit and full pay off any charges on it before the deadline. This will reflect positively on your overall score but remember it takes about 6 months for your score to improve.