Bad credit mortgages are available to homebuyers with a low credit score. For people with low credit ratings, banks will not offer mortgages because they see these homebuyers as being at risk of not making payments. Our team specializes in setting our clients up with bad credit mortgages in Uxbridge.
Unique Features of Bad Credit Mortgages
Bad credit mortgages have higher interest rates than traditional bank loans. Lenders consider several factors when they determine the rates and terms of the mortgage. In order to approve a bad credit mortgage, a lender will focus on the equity available in the property. Others factors, such as income, registered liens, also play an important role. For instance, lenders view builders liens and property tax liens as an additional mortgage on the property.
Candidates for Bad Credit Mortgages
People with a low credit score or home equity will have difficulty in borrowing from the banks. One alternative is to consider bad credit mortgage lenders in Uxbridge. These mortgages have interest rates of 8% to 15% and include fees for the lawyer, home appraiser and admin staff. The biggest requirement of private lenders is Loan-to-Value (LTV) ratio.
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.
A Closer Look at Credit Scores
Credit scoring assesses credit risk based on a person’s current credit history and accounts, reported in a range of 300-900. The higher this number, the better the score. Lenders see this report as an indication of whether or not a person will repay the loan money back to them. The scores are determined by the following data.
- Non-payment
- Late payments
- History of applying for credit
- Current amount of debt
- Credit history length
- Types of credit accounts
- Inquiries on the credit report
- Writing bad checks
Banks typically provide mortgages to people with scores above 650. For people with scores lower than this, a private lender that offers bad credit mortgages in Uxbridge is a good alternative.
Ways to Improve Your Credit Score
- Paying your bills on time. Mortgage lenders also look at payment trends on rent and debts.
- Maintaining a low balance on credit cards. High amounts of credit card debt can be difficult to manage.
- Avoiding the opening of unnecessary credit cards. Closed accounts may still appear on your credit report and impact your score.
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!