Institutional lenders must adhere to strict rules before approving any mortgages in Canada. This creates a situation where banks and trust companies cannot lend to people with bad credit. Citizens in this category soon realize that the only place to go for loans is private lending companies if they ever need a mortgage. We help people with bad credit find private lenders to get the bad credit mortgages they seek in Stratford.
Credit Scores Required by Different Lenders
- For a trust company to give a mortgage, you need 550 points or more
- At least 600 points are required to get attention from a bank
- Bad credit lenders do not consider credit score
How to Verify Credit Score
Canada is served by two major credit bureaus, Equifax and TransUnion, which both provide a reference for people who need to understand their credit standings. You can visit relevant websites to request a copy of your own report, but note that banks and other lenders can get your report from the credit reference bureaus. We also do credit reporting and encourage our customers to reach out to us if they want a free copy. Poor credit ratings are a result of failure to pay bills, defaulting on debts or simply borrowing more than you can repay.
Boost Your Credit Score
Paying off your credit card debt and bills will cause your credit score to increase. To do this quickly you must be able to pay all monthly debts on time to make sure that the lenders give a good report about you to credit reference bureaus. You may get a secured credit card from the bank and make a deposit to be on the safe side. With a secured card, you can make some purchases without worrying about the repayment.
The deposited amount covers the debt until a customer can repay to avoid hurting a credit score over late payments. Another measure to improve credit ratings is working closely with private lenders who are willing to issue reasonable mortgages at an affordable interest. By honouring the terms, you will gradually build a rapport with the lenders, who may also report to credit bureaus. Once you have achieved the desired credit score it is possible to access the best rates offered by leading banks in the region.
Private Lenders Offering Bad Credit Mortgages in Stratford
If you need a mortgage with a credit score below 550 only a private lender is able to grant it to you. Stratford’s bad credit mortgage lenders usually offer mortgages without much fuss about a client’s credit score. Bankrupt, jobless and people who often evade payments are most likely to have a poor credit score.
Requirements for Bad Credit Lender Mortgages
The loan-to-value ratio is the most important factor for a private lender whose main interest is in the real estate market. The LTV ratio is the percentage of the property’s value owed in mortgages. If a homeowner has a home worth $1,000,000 with a $500,000 first mortgage and is requesting a $250,000 second mortgage, the LTV ratio for the requested mortgage can be up to 75% of the property’s value. To get the lowest interest rate, you will need a loan-to-value ratio below 65% and enough income to cover the monthly interest payments. Private lenders will offer a rate between 8% to 12%. The lower the LTV, the better the rate.
Private lenders agree to issue mortgages to people with poor credit only if sufficient equity remains. They can sell off mortgaged property if customers default, though this isn’t always sufficient to cover losses. Before a private lender can be compensated, they have to ensure that other mortgages that came before are cleared. Due to uncertainty and risk, private lenders refuse mortgages on properties with LTV above 75%.
Interest Rates and Fees
Bad credit means that you have to accept whatever you can get, and that means taking out expensive loans. Private lender bad credit mortgage rates range from 7% to 15%, contrasting sharply with banks’ rates of 2.7% to 4%. You must also factor in administrative fees for lawyers, home appraisers, and other professionals involved in the mortgage setup process. You should be open to different mortgage lenders so you can find good deals. With our Stratford lender network, we secure multiple quotes for customers to find the best interest rates available.
Mortgage Broker Store can help connect an Ontario homeowner to an appropriate private lender to meet home equity loan needs. Continually strive to find the best match when looking at your particular mortgage and financing goals. We work with Ontario private lenders, guiding you through crucial decisions in the lending process. We will steer you in the right direction in your mortgage search. Call us at 647-493-4855 to take the next step!