If you’ve experienced some financial difficulty and are looking for a mortgage you may find some unexpected difficulties. If you feel you might have limited chances of getting bank loans at low rates due to a low credit score, you can apply for bad credit mortgages in Newmarket from private lenders. Banks remain interested in those with good credit score and record but of course, there are all sorts of reasons that can lead to many blemishes on one’s credit file. It can be divorce, loss of employment, or something else.
How Is A Bad Credit Mortgage Different?
Bad credit mortgages come with higher interest rates than bank loans. It all narrows down to risk-based pricing where rate and terms of the mortgage will depend on the equity in your home. Generally, a bad credit mortgage lasts for 1 year and can be cancelled at any time with a 3-month interest penalty. If you stop making payments and the lender has sent you a notice, oftentimes you will have to clear the entire balance in one go. Otherwise, you may lose your house to power of sale or foreclosure.
Understanding Your Credit Score
You can qualify for a loan at a higher interest rate if you have a low credit score. It also depends upon the equity you’ve built up in your home. Credit scores usually range between 300-900, the higher the better. You may have a low score if you have a long history of defaulting on payments, or have applied multiple times for credit and have been rejected. You may have a lower score if you write bad checks.
Traditional lenders prefer to approve borrowers with a credit score above 650. People with scores below this will have to seek a bad credit mortgage lender.
Top ways to improve your credit rating:
- You must rebuild your credit by using and regularly clearing your credit card
Avoid moving homes too often as this can reduce your credit score
Stable employment can boost your credit score
- Try to manage your money with overdrafts and keep minimum sum on your credit accounts and never leave it to chance
- If you own credit cards with large unused limit, then try to reduce that limit or close them as lenders often get nervous when they see large available credit account
- Poor score will eventually fall off with time but make sure your recent history is good
Bad Credit Mortgage Newmarket – Is It A Good Option?
If you have a low credit score and cannot borrow from banks, you should consider a bad credit mortgage. It may come at a higher rate, but you will get it easily and most lenders can easily go up to 88 percent of the value of the property. Our brokerage can request multiple quotes and compare them, including fees and costs.