Banks in Canada will only approve a mortgage request if the client has a high credit score. Ideally, it should be above 550 for credit unions to consider your application for credit. Individuals who are unable to meet this criterion have to seek services from a bad credit lender and thankfully, our staff can help apply for bad credit mortgages in Sault Ste. Marie.
Credit Score Requirements for Various Lenders
- Regular banks need to see a minimum score of 600
- Trust companies will work with a score above 550
- Private lenders will accept a low credit score
How Can You Get a Copy of Your Credit Score?
Lending institutions can get your credit score from one of the registered credit bureaus like TransUnion and Equifax. Individuals can also request personal copies by visiting the bureaus’ websites or have us get it for them free of charge. Bankruptcy, failure to pay bills, and taking out too much debt are some of the contributing factors to a low credit score.Lenders only seek to know how you use the loan for the record keeping purposes.
Bad Credit Lenders for Sault Ste. Marie Mortgages
If your credit report reveals a score below 550, banks and credit unions will not approve your loan. Your only hope is lenders who offer bad credit mortgages. Our network of bad credit lenders in Sault Ste. Marie do not rely on your credit score to make a lending decision. The vast network of lenders in Sault Ste. Marie, also allow people to borrow even with bankruptcy and consumer proposals. Consumers can take loans against property and use them to finance personal matters, business ventures or pay school fees. By allowing unemployed or seasonal workers access to equity on property they own, private lenders give people of Sault Ste. Marie, a rare chance to actualize their dreams.
Approval Requirements for Bad Credit Mortgage
Before deciding whether to lend you money or not, a bad credit mortgage lender must calculate how much equity you own. By dividing secured debts against appraised selling price of property, they get the loan to value ratio, which shows what percentage of the home you own. Any result above 80% means that you own too little of the home to stand a chance with private lenders who need to cushion themselves from high risk. Such lenders will only offer mortgages for property that they can sell in case the client defaults. People with relatively good credit may work with bad credit mortgage lenders who will grant them better interest rates as there is little chance of defaulting. This gives them a chance to achieve desired credit scores by banks and credit unions so they can access credit at better terms in future.
Bad Credit Mortgage Fees and Rates
Canadian banks charge 3-4% interest on mortgages while private lenders generally charge 7-15% interest owing to the high risk associated with their business. Bad credit mortgage lenders also demand set up, legal and administrative fees, which can be very expensive. There are stark differences in charges from one lender to another, making it important to compare prices before committing to any product. Our bad credit mortgage lenders also serve other parts of Ontario besides Sault Ste. Marie.
Improving Your Credit Score
Credit cards are the most common forms of credit and therefore a major cause of low credit scores among consumers. Paying off credit card debt on time will boost your score over time but there are other ways of improving it. Experts advise people to make only small charges to their cards or choose a secured credit card. To get this card from a bank, you need to deposit an amount that can be used to repay outstanding debts on it. It is best not to exceed 60% of the secured card’s limit and make sure that all debts repaid. It takes 6 months of consistent debt repayment for a credit score to improve so you must be patient. Taking out a bad credit mortgage and then paying it back in time is also a good way to improve your score. Some borrowers default on bad credit loans thinking that it does not affect the score but it is worth noting that private lenders also report to Equifax and TransUnion.