Banks in Canada need to see a high enough credit score in order to approve you for a mortgage. Banks and credit unions need to see a credit score of 550 or greater before they can approve a mortgage application. Those with low credit scores cannot get mortgages from the top lenders and need to find a bad credit lender. Our staff helps our client find lenders to provide bad credit mortgages in Mississauga.
Credit Scores That Different Lenders Require
- The Banks want a credit score of 600 or more
- Trust companies want a credit score of 550 or more
- Private lenders will accept any credit score
Getting a Copy of Your Credit Score
Banks and other lenders can pull credit scores from credit bureaus including TransUnion and Equifax. We provide copies of credit scores free of charge, but you can request a copy directly from the credit bureaus as well. Credit scores will fall when a person doesn’t pay their bills, takes on too much debt, or goes into bankruptcy.
Bad Credit Lenders for Mississauga Mortgages
When you’ve received a copy of your credit score and it shows a score of less than 550, you will need to turn to a lender that offers bad credit mortgages. Our bad credit mortgage lenders in Mississauga will provide mortgages for any credit score. Bankruptcy and consumer proposals also will not allow you to get a mortgage from a bank or trust company. We have a network of private lenders which provide bad credit mortgages in Mississauga and other cities across Ontario.
Bad Credit Mortgage Approval Requirements
Private lenders do not look at your credit score when deciding to provide a mortgage. These lenders will evaluate the secured debts on the property and the estimated selling price of the property. Private lenders need to consider the safety of their investments and will refuse to provide mortgages when a property has too much secured debt. Private lenders will register a mortgage against a property which allows them to sell the property when the mortgage goes into arrears. To determine the risk that a mortgage poses, lenders will calculate the Loan to Value (LTV) of a property. The LTV can be determined by taking the value of the existing mortgages and dividing that by the estimated selling price of the property. Our lender network can provide bad credit mortgages in Mississauga for all homes with an LTV of no more than 80%. A large income or good credit score can help get better interest rates but does not matter for the mortgage to be approved.
Bad Credit Mortgage Fees and Rates
Lenders providing bad credit mortgages charge greater interest rates than banks due to the risks inherent in this type of investment. Major Canadian banks will charge interest rates between 3%-4% on their mortgages while private lenders can charge anything from 7%-15%. Private lenders that provide bad credit mortgages also charge other fees in order to set the mortgage up. The lender will charge an administrative fee, the lawyers need to charge for legal work, and there is a fee for a home appraisal. Comparing the rates and fees for the different lenders helps you get a better deal on your mortgage. Our network of bad credit lenders can provide mortgages in Mississauga as well as the rest of Ontario.
Improving Your Credit Score over Time
In order to improve your credit score over time, you need to be able to pay off all credit cards and bills. Being on time with all payments will help to quickly increase your credit score. Credit cards are a common tool used for improving credit score while paying off bills. Only charging small dollar amount to the cards means it will be easy to pay off fully. A foolproof way to increase a credit score would be to apply for a secured credit card at a bank.
Secured credit cards are offered by all banks and are easy to get. In order to get the card, you must first pay a deposit which can be used to pay off outstanding debts on the card. It is a good idea to never use more than 60% of the card’s credit limit and to pay off 100% of all debts on the card. Your credit score will improve after around 6 months of consistently paying off your credit cards.