Many people have issues getting bank mortgages due to poor credit. All banks have strict credit score requirements that individuals have to meet in order to qualify for a bank mortgage. People with bad credit can still get a mortgage with a private lender that specialises in providing bad credit mortgages in St. Thomas. Our team is focused on helping people who have been turned away by banks get the financing they need.
Credit score requirements by various lenders
- All Canadian banks have a credit score requirement of at least 600
- Trust companies have a credit score requirement of at least 550
- Bad credit mortgage lenders will offer credit any credit score.
How to Check Your Credit Score
In Canada, credit scores are generated by Equifax and TransUnion. Any individual who wants a copy of their credit score can request from these two credit bureaus on their official websites. You can also request the services of our brokerage to help pull a credit score for your use.
Private Lenders That Offer Bad Credit Mortgages
Private lenders specialise in offering bad credit mortgage to individuals who are refused mortgages from banks and Trust companies. St. Thomas bad credit lenders can offer you a mortgage no matter your credit score. Some of the issues that can prevent you from accessing bank mortgages include criminal cases, bankruptcy, court judgments and late repayment for loans. Private lenders have alternative lending criteria and can overlook bad credit scores. We have a network of private lenders who can provide bad credit mortgages for individuals in St. Thomas, Ontario.
Requirements for Private Lender Mortgages
The most crucial factor that private lenders look at when giving bad credit mortgage is the Loan to value ratio (LTV). Loan to value ratio refers to the ratio of the home’s mortgages to its selling price (LTV divided by the value of secured mortgages). Offering bad credit mortgages is a risky endeavour for any business. To ensure that they cushion themselves from the inherent risk, private lenders will not offer credit on properties that have too much debt on them. Private lenders take the necessary measures to ensure that they can recover their money when the borrower is unable to repay the mortgage.
A Loan to Value ratio helps the lender evaluate the risk of lending a mortgage on a particular property. Bad credit mortgage lenders in St. Thomas will offer bad credit mortgage on properties with up to 75% Loan to Value. Private lenders can offer better interest rates if the borrower has higher annual incomes and better credit scores. These are however not the primary requirements for getting a bad credit mortgage.
Interest Rates and Fees for Bad Credit Mortgages
Bad credit mortgages carry a higher interest rate than the normal bank rates. Generally, a normal bank mortgage would come with an interest rate in the range of 3% and 4% whereas a bad credit mortgage can have interest rates of between 7% and 15%. Additionally, private lenders will charge fees for processing the mortgages as well as administrative fees that are paid to the lawyers and for a property appraisal.
Tips to Repair Your Credit Score
You can boost your credit score by paying your bills and credit cards on time. Secured credit cards are offered by several reputable banks in Canada and they can help in improving your credit score significantly.