There are different classes of lenders offering unique forms of credit based on individual’s credit scores. Those who fall below 550 points are not eligible for loans from trust companies and banks, leaving them with the singular option of applying for bad credit mortgages. If you are in this situation, better contact a private lender whose specialty is the provision of bad credit mortgages in different parts of Ontario including Toronto, Mississauga, Brampton and now Georgetown.
Credit scores required by different lenders
- Trust companies require you to have a score of 550 or more.
- Banks in Canada demand 600 points to entertain mortgage applications
- Private lenders aren’t interested in credit scores.
How to Check Your Credit Score
Transunion and Equifax are the major credit bureaus in Canada who calculate credit scores for all residents. To get a copy of your report, visit any of these company’s website or simply contact our mortgage team in Georgetown to help you get it free of charge. Low scores are an indication that you have filed for bankruptcy, never pay your debts in time or often take out more loans than you can afford.
Private Lenders for bad credit in Georgetown
If your credit score falls below the 550 limit, your only loan options are with private lenders who aren’t rattled by poor credit ratings. Bad credit mortgage Georgetown lenders are able to issue loans to people whose scores aren’t too appealing in an attempt to meet the huge demand for credit. Those who have undergone consumer and bankruptcy claims in the last two years and are in need of mortgage loans can also approach private lenders. We never turn clients down as we have acquired a large network of lenders throughout the city to help anyone who needs a bad credit mortgage in Ontario.
Bad Credit Mortgage Georgetown Approval Criteria
Rather than rely on your credit score, private lenders focus on a home’s equity. Bad credit mortgages have a higher default risk which prompts private lenders to find alternative risk reduction methods. The offer registered mortgages which allow them to sell property whose owner is unable to repay. These lenders can only be paid once all other mortgages on that property are paid off in full. To assess risk the lenders have to figure out the LTV or loan to value ratio by dividing the value of all mortgages by the appraised property price. Bad credit mortgage lenders will only approve loans for a property whose LTV doesn’t exceed 80%. The clients’ income and credit scores may not influence their decision to offer loans but it will certainly play a part in how much interest you pay.
Fees and Interest Rates
Interest rates for bad credit mortgages are naturally higher than those charged by banks. Private bad credit mortgage lenders trying to reduce risk will charge anywhere from 7-15% interest. Mortgage set up fees are also required by lenders so it is up to the client to shop around for the best terms possible. Luckily we have a vast network of private lenders in Georgetown who will compete to offer the best mortgage terms.
Improving Your Credit Score
If you always pay your debts, your credit score will gradually improve. The best way to keep the score rising is making purchases on your credit card and paying off that debt in time. Canadians have the option of taking secured credit cards on which a deposit is made to reduce the chances of default. To be on the safe side, you shouldn’t go past the 60% limit on the card and make a point of paying more than the monthly requirement. Georgetown residents should note that it takes about 6 months for your credit score to increase.