Banks in Canada have a long mortgage process but the most important part in it is checking the borrower’s credit score. This is a three-digit number obtained from your credit report with an aim of providing lenders a credible reference point for clients’ credit habits. Banks and credit unions do not lend to people with low scores because the risk of defaulting is very high among them. These people are left to private lenders who can offer bad credit mortgages in Tillsonburg. We have many such lenders in the city and we can help you reach out to them.
Credit Scores Required by Different Lenders
- Banks need 600 points
- Private lenders do not need a score
- Credit unions lend mortgages at 550 points or more
How to Check Your Credit Score
Anyone can request their credit score from the leading credit reference bureaus; Transunion and Equifax. You need to provide copies of identification and some background information to the credit bureaus who will send your score by mail. This should take three weeks but you can pay a fee to get it faster. If this seems unnecessary you can reach out to us for a free copy within a short time. Poor credit habits like writing bad checks, failure to repay debt, and late payments are some of the contributing factors to a poor score.
Bad Credit Mortgage Lenders in Tillsonburg
People whose credit score is 550 or less constantly worry about their loan applications, which cannot be approved by banks. Our bad credit mortgage lenders in Tillsonburg are not tied down by as many rules as banks are meaning that they can lend without worrying about the borrower’s credit. You can borrow from our network of bad credit mortgage lenders who do not care if you recently faced consumer proposals, low credit score or bankruptcy when deciding whether to advance you the loan or not.
In addition, bad credit lenders accept nearly every reason for needing the loan as opposed to banks that need much convincing. The private lender mortgage can, therefore, be used to pay for personal matters like taxes, vacation, a new car, or home improvement project. A private lender will only ask why you need the money for record keeping purposes.
Approval Requirements for Bad Credit mMortgages
You may not need a high score to get a bad credit mortgage but the private lenders must weigh risk in your property. This is done by measuring LTV or loan to value ratio to get an idea of how much equity a borrower has. LTV can be obtained by dividing total value of debts by the current selling price of property. The ideal result should not exceed 75% for you to qualify. Private lenders are very wary when offering these mortgages because their preferred clients could default without warning. If a home has too much debt in it, many private lenders will reject it knowing that they may lose their money in case of non-payment.
Fees and Rates for Bad Credit Mortgages
Banks charge very low interest of 3%-4% on mortgages but that is possible because they work with the most creditworthy borrowers. If private lenders decide to offer you, money they will expect you to repay at 7%-15% interest. You are also required to pay legal, home appraisal, paperwork processing, and other charges needed to complete the mortgage. Private lenders may have a right to sell property in default but they cannot recover their money before other mortgage lenders who came before. This is why they avoid lending to a property with equity below 15%. You can negotiate better interest rates with a high annual income but our private mortgage lenders in Tillsonburg do not demand it. It is important to compare rates if you want to get the best interest rates for the mortgage.
How to Improve Your Credit Score
Use a credit card only for small emergency purchases to make monthly payments more affordable. You should request a secured card from your bank to further protect yourself. A deposit must be made on such a card to act as security for the debt when overdue payments are generated. It might take about 6 months to get a poor credit score to the desired levels but with commitment, it can be done.