Most people that need a mortgage will first go to a bank, but banks generally cannot provide loans to people with bad credit. If you’ve been turned down by a bank for a loan, then you will have to find a private lender that offers bad credit mortgages in Waterloo. Our brokerage specialises in providing people with bad credit mortgages at competitive rates.
Credit score requirement by different lenders
Equifax and TransUnion are the two main bureaus in Ontario, Canada tasked with the responsibility of issuing credit scores to those who require them. One can request a copy of their credit score directly from the official websites of these bureaus. We also offer free credit score copies on request.
Once you have your credit score report and it indicates a score of less than 550, then you need to find a private lender who can offer bad credit mortgage. Banks and trust companies have very strict guidelines in approving mortgages. This locks out many people from accessing their services. We have connections with private lenders in Waterloo who are willing to offer bad credit mortgages regardless of the individual’s credit score.
Unlike banks and Trust companies, private lenders do not look at the individual’s credit scores. These lenders use an alternative way to evaluate the risk on their investment before approving a mortgage on a particular property. Offering bad credit mortgages is a risky business and therefore private lenders will need to consider the safety of their investments before approving such mortgages. Private lenders will be hesitant to approve bad credit mortgage on properties that have too much debt. In order to determine the risk on their investments, private lenders will calculate the Loan to Value ratio of a property. The Loan to Value (LTV) is determined by dividing the value of the existing mortgages on a property by the estimated selling price of the property in question. Some lenders will offer bad credit mortgages for properties with an LTV of up to 85%.
Due to the inherent risk in this business, most private lenders will charge interest rates that are higher than that of banks and Trust companies. While the majority of the Canadian banks charge interest rates in the range of 3-4%, private lenders will charge interest rates from 7-15% interest rates on their mortgages. Additionally, private lenders will charge administrative, home appraisal and legal fees. It is advisable for any individual looking for bad credit mortgages to compare fees and interest rates by various lenders to ensure that they get the best deal.
One of the important ways to improve individuals’ credit score is by paying off the bills and credit cards on time. Most of the people use credit cards to pay off their bills. Another simple way of improving your credit score is by getting a secured credit card and putting some money on the card. Then use the money on your secured credit card to pay off your bills. All reputable banks in Canada offer secured credit cards to their customers. They allow the customer to deposit a certain amount of money that will be used when an overdue payment is generated. It is a good practice to keep your credit obligations in check. You should always take caution not to exceed a credit limit of 60%. If you are consistent with your credit payments, then your credit score will improve within six months.