Canadian banks will only provide mortgages to people with high credit scores. If you do not have a credit score of at least 600, then you cannot get a bank mortgage. Our team connects our clients with private lenders that offer bad credit mortgages in Kitchener.
Credit Scores Needed for Various Lenders
- Canadian banks need a credit score of 600 or more
- Canadian trust companies need a credit score of 550 or more
- Private lenders can offer mortgage to people with any credit score
Banks and trust companies will automatically turn down applicants with poor credit score with no chance for further negotiation. Private lenders service the people that are turned away by banks and they are generally more open to negotiation. Our staff specialises in connecting people with private lenders that offer bad credit mortgages in Kitchener.
Getting Your Credit Score Report
Mortgage lenders have access to the credit reports that are compiled by the credit bureaus Equifax and Transunion. Our mortgage brokers also have access to these same credit reports and we can provide it to you for free. You can also get a copy of your report by requesting it directly from the websites of Equifax and TransUnion. You will have a poor credit score if your debt payments are higher than your income, if you fail to pay bills, or if you’ve gone through bankruptcy or consumer proposal.
Kitchener Bad Credit Mortgages Offered By Private Lenders
Without a credit score of at least 550, your only option for a mortgage is to seek out a private lender that services Kitchener. Bad credit private mortgage lenders can offer a mortgage regardless of your credit score. They can also offer mortgages to people who banks turn away due to bankruptcy or consumer proposal. We have connections with many private lenders that are able to offer bad credit mortgages in Kitchener and across Ontario.
Bad Credit Mortgage Approval Requirements
To approve a mortgage a private lender will look at the mortgages registered on the property and the appraised price of the property. Lenders will reject mortgage applications if the property has too much money in existing mortgages. In accordance with the Ontario Mortgages Act, the lender can sell the mortgaged property if the fees are left unpaid. If a lender sells a property they may reclaim their money after paying off the prior mortgages registered on the property. The riskiness of a property is determined when the lender calculates the Loan to Value (LTV) of the property. A property’s LTV can be found by dividing the value of the registered mortgages by the appraised selling price of the property. Private mortgage lenders in Kitchener will turn down properties with an LTV of more than 80%. Private lenders are willing to negotiate the rate offered if the applicant has a high income or credit score, but these factors do not influence mortgage approval.
Explaining the Costs That Come With Bad Credit Mortgages
Canadian banks charge the lowest rates for mortgages and offer the cheapest financing to those that can qualify. Those who cannot qualify at banks must work with private lenders who will charge more than banks since they approve riskier mortgages. Canadian banks offer mortgage rates of 3% to 4% while private lenders offer mortgage rates of 7% to 15%. Private mortgage lenders also charge additional fees to start up the mortgage. The lenders must pay their lawyer, their own staff, and the property appraisal company. Comparing the rates and terms offered by different lenders will allow you to get a better deal. Our brokerage can contact several lenders in our network and provide you with a variety of mortgage offers.
Repairing Your Credit Score
In order to repair your credit score you must be able to pay all credit cards and bills every month. Many people choose to only put small charges on their credit card in order to easily make all the payments. Another safe option to improve your credit is to get a secured credit card from a local bank. In order to get a secured credit card you must first pay a deposit, which is to be used when the card’s fees are not paid. It’s recommended to not exceed 60% of the card’s credit limit. Typically it takes a minimum of 6 months to repair a damaged credit score.