You can get a mortgage even if you have bad credit. However, you’ll have to pay more interest and will need to put up an additional amount of money. There are mortgages specifically designed for those with low credit scores, and some lenders are specialized in providing these. They are referred to by the names of bad credit mortgages, credit mortgages, or subprime mortgages.
Mortgage broker Langley helped many individuals with bad credit qualify for a mortgage. It is important to understand that while having bad credit can make the mortgage process more difficult, it is not impossible to get approved.
What is bad credit?
You might think that you have bad credit because you’ve had the experience of being turned down for loans before. But keep in mind that various banks have different requirements when it comes to loaning money. Some lenders might view you with more confidence than others. Therefore, there is no hard and quick rule for what constitutes bad credit. There are, however, certain aspects on your credit report that cause lenders to think that you’re at a higher risk, for example, not making credit card payments, defaulting on loans, and also making credit applications too often.
Credit Scores and Mortgage Approval- Is There Such a Thing As a Credit Too Low to Qualify?
Three major lenders are available within Langley that can provide various kinds of mortgage loans. A lot of homeowners aren’t familiar with the three types of lenders.
- A Lenders- Banks and large lenders. These lenders typically have very stringent requirements to be eligible for mortgage loans. Based on the recent tougher stress tests that were imposed by the bank’s criteria, the requirements include perfect credit scores. Preference is given to those with a full-time salaried job.
- B Lenders- Credit Unions and Trust Companies. These lenders might not require the same credit scores, but they would prefer solid credit scores along with traditional salaried employment.
- C Lenders- They are private lenders who can lend as an individual, as an association of lenders, or as mortgage brokers who are specialized in private loaning of mortgages. Credit is often overlooked, and these lenders rely on the current appraisals of your home and its place of residence. Due to poor credit, the interest rates of private mortgages are greater than those offered by banks. The rates of interest on the majority of mortgage loans range from 7 to 12 percent, with fees ranging from 4 to 6% of the total amount for the loan.
Can You Be Disqualified from Obtaining a Mortgage?
The short answer is yes if you’re applying with a lender whose criteria are out of reach. If you have damaged credit in the past, numerous banks (both A and B) won’t accept you for mortgage financing. Credit plays a crucial aspect in determining your mortgage eligibility for these lenders. Insufficient income or excess debt could also hinder the Ontario homeowner from being able to get a mortgage loan.
If you’re employed, the A or B lender might not give you a secured mortgage even if your home can be used to secure collateral. Self-employed income is likely to fluctuate between months, and it is difficult to prove annually. Banks prefer those who have a steady annual income.
Steps to Boost Your Chances of a Mortgage Approval
- Get a current credit report at one of two credit agencies that are the largest in Canada, Equifax or Transunion. Take a close look at areas that require improvement.
- Always make sure you pay your credit card promptly and in full when possible.
- Reduce your debt the best you can.
- Get a new appraisal of your home
- Make sure to increase your monthly income when needed.
- Save up for a bigger down payment.
Mortgage Broker Langley Can Help You To Get Mortgage Approval Despite Poor Credit
The benefit of private loans is they are short-term and can be negotiated swiftly, and offer various options for addressing urgent financial situations. The majority of private loans range from 1 and 3 years in duration. The length is long enough to resolve urgent financial problems and give you enough time to get back to restoring credit in order to be eligible for mortgage loans later with the most favorable mortgage loan conditions. Don’t let your credit score be a barrier to you from taking care of the issues you’re facing today.
Mortgage Broker Langley has extensive knowledge of mortgages for people with bad credit and has access to a wide range of private lenders who can negotiate the terms of private mortgage loans that meet your specific short-term financial objectives. Do not hesitate to reach us at any time to discuss any questions you might have.
John Smith, a professional content writer with more than two decades of experience as a writer and editor, covers many topics for ABmantra.com. He began his career writing about Health Tips, Finance, Fashion, Home Decor, Education and many more niches in his hometown of California, USA.