Institutional lenders in Canada have a long mortgage approval process but the most important part is checking your credit score. This is a figure generated from your credit report to give potential lenders a picture of your credit habits. Banks and credit unions will not lend to anyone with a low score bearing in mind the legal implications of a defaulted loan. Such people with poor credit scores are left to rely on bad credit mortgage lenders. We knew of many bad credit lenders offering bad credit mortgages in Midland who are ready to provide mortgages without considering the borrower’s credit.
Credit Scores Needed by Various Lenders
- Banks need to see 600 or more points
- Trust companies must see 550 points
- Private lenders do not look for credit score
How to Confirm Your Credit Score
The main credit bureaus in Canada can provide the credit score of every citizen and it is advisable to request an updated copy at least annually. The credit bureaus need some background information as well as identification to process the score so it can take up to 3 weeks to get the report. If you are pressed for time, you can contact our brokerage to provide you a free copy. People with poor credit habits usually have very low scores, which make them ineligible for bank loans and other low-interest credit facilities.
Bad Credit Mortgage Lenders in Midland
A credit score below 550 means you can only borrow from bad credit mortgage lenders in Midland. They do not have to follow as many tough rules as banks do meaning that they can offer loans to people facing bankruptcy proposals, poor credit scores, or consumer proposals, which are not, entertained by banks.
Approval Requirements for Bad Credit Mortgages
Not considering credit, private lenders have to know assess the risk you present as an investment. This means calculating the loan to value ratio of a property in order to know how much equity is left. Private bad credit mortgage lenders in Midland avoid lending against property with too much debt as it only reduces their chances of profiting from the sale of the property. Loan to value or LTV is measured by dividing the total value of debts by the current price of a home. Lenders hope to work with borrowers whose property LTV is below 85% so that they may recoup their investment in the event that you are unable to repay. We can connect you to bad credit lenders in Midland who will offer great loan amounts to pay taxes, tuition and other expenses that need urgent attention.
Bad Credit Mortgage Fees and Rates
After determining, that a lender deserves the mortgage a private lender looking to maximize profits by minimizing risk will often charge heavy interest. 7%-15% is the common interest rate that you will pay for a bad credit mortgage in Midland but banks offer 3%-4% interest on mortgages for people with high scores. You will also have to pay lawyers, administrators and other professionals needed to complete the mortgage process. Private lenders get the power to sell off the property in default but they cannot take home all the proceeds. The Ontario mortgage act clearly states that prior lenders be paid before the private lender may claim their cut. Private mortgage lender mortgages are often expensive but if used wisely, they could contribute to a brighter financial future.
Gradually Improving Your Credit Score
You probably have a low credit score because you have a habit of writing bad checks, delaying your bills and missing credit card payments. Credit cards are the most commonly used form of credit and therefore the easiest to use in improving credit score. Ensure that payment is made early enough and only make small charges to a card if you want to meet the monthly repayments. Other loans must be repaid as agreed to maintain a good score. Banks also issue secured credit cards to help in keeping the credit score at optimum levels. You must make a deposit on this score to make sure that there is enough to cover your debt when overdue payments are released. Never exceed the 60% limit on your secured card and make a point of paying to be assured of a good result. It takes about 6 months to see an increase but that depends on what your score was before.