If you are a homeowner or a potential home buyer with bad credit, it can be difficult to secure a mortgage. That’s because the major banks see you as being a high-risk customer who might default on that mortgage until your credit score improves. Fortunately, for homeowners with bad credit, there are other options than using traditional mortgage lending institutions.
How to Get a Mortgage with Bad Credit in Toronto?
1. Banks: Not all banks will provide those in Toronto with a bad credit mortgage . While some financial institutions will help people with bad credit secure a mortgage, it may be at a lower amount or with higher interest.
2. Other Lending Institutions: The financial landscape has changed significantly in Toronto. There are a lot more mortgage lenders out there, many of whom will help homeowners secure a bad credit mortgage. Like the major lending institutions, each lender will have offer different conditions.
3. Debt Consolidator: A debt consolidation loan can help those struggling with bad debt or other financial challenges secure a mortgage. By consolidating all of your debt you can also save money with lower payments. Debt consolidators are independent and are not affiliated with a bank or other lending institution.
What to Look for in a Mortgage Professional?
A knowledgeable mortgage professional will go over your needs, discuss your credit history and what you need to do to improve your credit score, and help you set goals. Unfortunately, not all mortgage lenders or brokers are created equal. To find a mortgage professional you can trust, make sure they are both licensed and independent. A licensed mortgage agent in Toronto has access to hundreds of lenders interested in working with you, the borrower.
If you deal directly with the banks, they will only suggest their own financial products, whether they’re in your best interests or not. Many people say they like working with a mortgage professional because they get a better rate than if they went to the big banks and other lending institutions on their own.
Factors Needed to Qualify for a Bad Credit Mortgage
For starters, the biggest credit companies in Canada use a scale from 300 to 900; the higher your credit score, the less of a risk you are for mortgage/loan lenders . Factors that can negatively affect your credit score include having too much available credit, high account balances, loan balances, and late or skipped bill payments. A credit score of 650 or below is generally when it becomes difficult to get a mortgage, while the best rate usually comes with a minimum score of 680.
However, if your credit score is lower than 680, you can still get a mortgage. Lenders will work with those with a bad credit score if they have a dependable source of income. For instance, if you want a loan to buy a house, a larger down payment shows the bank that you know how to save.
If you are a homeowner or potential homeowner with bad credit and want to see what kind of mortgage you qualify for, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.