Getting a mortgage in Ontario with bad credit can be a challenge. Many banks simply refuse to deal with people who have poor credit. We offers a network of high-ratio and non-conventional lenders that can help you get approved.
There are many home loan options available for individuals with bad credit who have been turned down by the major banks.
While you might not be able to qualify with a prime lender at the lowest possible mortgage rate, there are many institutional lenders and private lenders who specialize in mortgage products for individuals with bad credit scores.
Even with bad credit, there may still be mortgage loan solutions available to you. We specializes in finding mortgage products for people who may have been declined for mortgages in the past or who are struggling to service their existing debt. Request your quote today.
How it works?
For some credit scores – take 650 for example – you may be able to qualify for a loan with either a prime lender or a bad credit institutional lender. When in-between ranges, lenders will look at additional factors, including:
1. Income. Prime lenders can still work with a credit score between 600 and 700, provided you can demonstrate that you have a dependable source of income. Your income can fall into one of two categories:
- Confirmable income is preferred by lenders, and is proven through Notices of Assessment (NOA).
- Nonconfirmable income, common among self-employed or commission-based employees, forces lenders to use an estimate of your income, based on the average income typical of your employment.
2. Down payment (if purchasing). The higher your down payment, as a percent of your home value, the better. A large down payment demonstrates to lenders that you can save money and you have more at stake in the property.
3. Equity (if refinancing). If you are refinancing, lenders will allow you to increase your mortgage up to a maximum loan-to-value ratio of 85%. However, they always prefer to lend when you have more equity in your home, as the loan is backed by a more secured asset.
4. Property type and value. This is, the most important criteria for being approved by a bad credit or private mortgage lender. To qualify with a bad credit lender, your property must undergo a strict appraisal and be rated average-to-good before you can be approved for a mortgage. Because other factors are risky (i.e. your credit score), lenders need to secure their investment in case you are unable to keep up with mortgage payments.
In summary, prime lenders can offer the best mortgage rates to clients who have great credit scores. Because bad credit institutional and private lenders take on riskier clients, they compensate by charging higher interest rates. However, these lenders are no less reliable than prime lenders and can still connect you to a good mortgage product to meet your financial needs.
It is important, if you have had problems with credit, to work with a mortgage brokerage, like us, who has experience working with problem credit and experience getting bad credit mortgage financing approvals. The last thing you want to do is make an offer on a home, only to find out that you don’t qualify for financing!
When we work with you to obtain bad credit mortgage financing the first thing that we will do is perform an in-depth review of your credit. We will advise you about what options are available to you and the necessary down payment required for you to obtain your bad credit mortgage financing approval. We will also provide you with information to help you improve your credit and help you to make your home buying dream a reality.
Contact me today or call at 416-402-7264 to find out if you qualify today!