Banks follow a strict mortgage approval process in which credit score is of ultimate importance. People with a score lower than 600 points are not accepted for bank mortgages and credit unions lend only at 550 points. While this is beneficial in protecting institutional lenders from losses it prevents many from accessing money tied up in their property. People with poor scores can only get bad credit mortgages in Niagara-on-the-Lake from private lenders.
Credit Scores Needed by Different Lenders
- Banks need 600 points or more
- Trust unions require at least 550 points
- Private lenders do not consider credit score
How to Check Your Credit Score
A credit score can be obtained from Transunion and Equifax, the two leading credit reference bureaus in Canada. They calculate scores based on individual credit reports but the formula is kept secret. Banks can pull your score when you apply for a loan to ensure that you meet the minimum requirements. You should regularly check your credit report to make sure there are no errors that might hamper the important credit score. If you do not pay bills, loans or take more debt than you can afford, it is highly possible for you to have a poor credit score.
Bad Credit Lenders for Niagara-on-the-Lake Mortgages
When you discover that your score is way below 550, only bad credit lenders can help. Our Niagara-on-the-Lake bad mortgage lenders will provide mortgages for any score, bankruptcy or consumer proposals. We have a network of private lenders who provide much needed bad credit mortgages in Niagara-on-the-Lake and other cities in Ontario.
Approval Requirements for Bad Credit Mortgages
Rather than your credit score, bad credit lenders will look at the debts on a property to inform their lending decision. To do this they must evaluate the LTV by dividing the value of debts by the appraised price. LTV should be below 75% for you to receive much-needed funding. Private lenders are very sensitive to risk and will not lend against property with too much debt. High debt means too little equity for the lender to make a profit from the sale of a property in default. A large income may help negotiate better terms for the mortgage but it is not required. You should compare rates by different creditors to get the best deal on a bad credit mortgage. Our lender network in Niagara-on-the-Lake can provide bad credit mortgages on the property with less than 75%, which indicates sufficient equity.
Bad Credit Mortgage Fees and Rates
The nature of a mortgage signed by private lenders allows them to sell a property if mortgage fees are not cleared but there is a catch; Mortgage lenders who came before must recoup their investment in order for lenders to recoup their money. To protect themselves, bad credit lenders have to charge high-interest rates of 7%-15% and add set up fees to the client. This will be expensive but it is a small price to pay for a chance at a better financial future. The bad credit mortgage can be used as you like because private lenders are more lenient than banks. They are ready to accept many reasons for needing a mortgage including tuition, renovations, vacation, or other need.
Improving Your Credit Score Over Time
It takes dedication to get your finances in order and clear any pending debts and unpaid loans. Once the slate is clean, you can start repairing your broken credit by making small, affordable charges to a credit card. Some people request secured credit cards as an assurance that their scores will not be affected by late payment. To get one you have to pay a deposit from which payments can be deducted when overdue charges are produced. You should also use this card sparingly, pay the debt, and never exceed its 60% limit if you want it to contribute to a high score. Improving credit score may take 6 months but do not give up because once you reach the desired 550 mark, then you will enjoy many affordable mortgages offered by banks. Meanwhile, you must work closely with bad credit mortgage lenders in Niagara-on-the-Lake to get the funding you need. You can contact us for help in finding the best mortgage lenders who will lend against any score as long as there is a chance for them to profit from the investment.