For outdoor enthusiasts and those who prefer a relaxed quality of life, Sudbury offers both. As the biggest metropolitan area in Northern Ontario, Greater Sudbury also represents the largest land area in the Province. As of the latest 2016 population rankings, Sudbury has 161,531 residents. With local attractions and activities for families, Sudbury remains an attractive city to purchase a home. But what if you have bad credit? Learn your mortgage options by reading on.
Bad Credit Mortgages in Sudbury for Those with Poor Credit
Mortgage rates remain very low as we claw out of the pandemic. These rates encourage many to obtain secured mortgage loans to take out primary mortgages (first mortgages) on Ontario properties. They also encourage existing homeowners to take out second mortgages to pay for different financial objectives.
To profit from such potential for equity gains borrowers/homeowners will seek lenders to help negotiate the best terms and most favorable interest rates on secured mortgages. This is relatively easy if a homeowner/borrower’s credit is strong and debt ratios remain low. What options are open for those that suffer from poor credit and may have multiple outstanding debts?
Fortunately, there are different secured mortgage loan options open for those who seek financing with damaged credit. The same stands true for those with high debt ratios compared to household income. These loans are offered by Ontario-based private lenders. Some of the private lending options include:
- Home equity loans
- Home Equity Lines of Credit (HELOC)
- Home Renovation Loans
- Bridge financing
- Debt consolidation loans
- Renegotiated terms on a principal (first mortgage)
How Will a Private Lender Be Able to Help?
When contemplating any of these loan options, a private lender will be assessing several key criteria, which include:
- The overall degree of equity existing in your property
- The current appraised value of your home (when applying for a second mortgage loan option)
- Additional assets that can be demonstrated to determine the mortgage amount
- Overall debt ratio (compared to overall household income)
- All sources of income, including self-employed, freelance, and contract-based income
When negotiating bad credit mortgages in Sudbury, a private lender will typically assign an interest rate between 8% and 12%, depending on the type of loan being negotiated and the borrower’s unique financial capabilities. Fees associated with most private loans tend to range between 3% and 6% of the loan’s total cost.
As a general rule, private lenders will not lend out more than 75% of your property’s current value, referred to as a 75% Loan-To-Value (LTV). A private lender will also prefer to see 25% existing equity in your home.
A loan higher than 75% LTV is deemed high-risk for a private lender. The job of a private lender is to try to mitigate risk while providing short-term financing for those who may have been turned away from the banks due to credit issues/debts.
Steps to Take When Preparing for Private Mortgage Financing
There are times in life when the degree of research and preparation that is put in will be directly responsible for positive outcomes. This applies when a borrower/homeowner is contemplating different private loan options. There are steps that you can take before sitting down with a private lender that will best prepare you for negotiating terms on a private mortgage.
- Research good pre-approval rates
- Gather all paperwork necessary, including proof of income, investment statements, and proof of assets
- Obtain a recent appraisal of your property if you are looking for a second mortgage loan option.
- Be clear on your mortgage loan objectives (are you looking for funds to renovate, consolidate debts or maybe buy an additional property)
- Know your credit score and try to increase your credit score before seeking pre-approval
- Be in contact with a mortgage broker for direction
A private lender will be able to meet with you and, by assessing a recent appraisal of your property, look at different financing avenues that best work with your unique financial circumstances. Private loans have some distinct advantages for a Sudbury homeowner/borrower:
- Private loans are negotiated quickly and are straightforward. To obtain financing for immediate expenses, free up funds through existing equity, or help make a payment towards a principal mortgage and other financial goals, a private lender can provide secured mortgage loans faster than banks or credit unions. The loan process is simple and will be finalized quickly.
- Private mortgage financing is on a short-term basis. Most private loans are structured as short-term loans (typically between 1 and 3 years). This time will provide the opportunity to restore credit and prove a reliable payment history. By paying the mortgage payments on time and in full throughout the loan, your credit score will improve.
Mortgage Broker Store Will Help Direct You Towards Private Mortgage Options
If you are a Sudbury homeowner or a borrower who wants to obtain mortgage financing, don’t let credit issues stand in your way of purchasing a home or taking out hard-earned equity from your property to pay for needed expenses.
House sales in May 2024 have continued to increase, with a 33% quarterly increase in the average home price. The average house price in the region now sits at $492,000. Housing sales in Sudbury have also seen a year-over-year increase of over 80%.
Mortgage Broker Store has access to a broad network of private lenders in the Sudbury area. A private lender can sit down with you and discuss your options directly, helping you achieve your mortgage goals.
At Mortgage Broker Store, we are in a position to examine your unique financial circumstances and advise you on the best private loan options and lenders that can handle your financial objectives directly.