Solutions for bad credit mortgages in Ontario
For those who have bad credit, looking for a mortgage can seem like an uphill battle to find a lender. Banks, credit unions and default insurers will be looking for a credit score of over 640, but those aren’t your only options for being approved for a mortgage with bad credit. At Canadian Mortgage Services, we can help you find reputable alternative lender (B lenders) and private lenders that will provide you with options for bad credit mortgages in Ontario.
Do you have bad credit? Here’s how to find out.
First, you’ll need to know the full extent of your credit score before you look into your options for bad credit mortgages. For a small fee, you can pull your credit score from credit bureau services like TransUnion and Equifax. You might also have a hunch that your score has been impacted by financial situations like missing bill payments, taking on too much debt, or even declaring bankruptcy. All of those scenarios will bring your score down.
Once you’ve received your credit score, what’s your number?
- Canadian Banks and Default Insurers want a credit score of 640 or more (but you should aim for over 680 in most cases).
- If you have a credit score of 550 or more, many Alternative Lenders will approve you for a mortgage, with some additional information and contingencies.
- If your credit score is lower than 550, we will more than likely need to explore options through a reputable private bad credit mortgage lender.
We’ll make it easy.
How to get a bad credit mortgage approval
We can help you tap into a network of Alternative lenders who will help you get even a bad credit mortgage approved, especially if you have at least a 20% down payment.
If private lending is necessary, the good news is that private lenders don’t need a credit score to provide you with loan options. Often, these lenders will instead evaluate the debts on the property, and they appraise the home based on its estimated selling price. That way, they can safely register a mortgage against the property, meaning they’ll get their money back if your mortgage ever falls into arrears. Traditional Banks won’t take the chance, that’s why they almost solely look at income and credit scores.
The trade-off is that you’ll usually require a higher percentage available for your down payment, and for taking on the risk, Alternative lenders and private lenders will charge you a higher mortgage rate. However, Alternative lenders are giving you the opportunity to get a mortgage when the banks won’t. Those with poor credit scores should consider all their lending options.
WE CAN BE YOUR MORTGAGE GUIDE
At Canadian Mortgage Services, we are committed to treating you with respect and integrity. We recognize that getting a mortgage can be complicated and confusing, not to mention intimidating. We are glad to be your guide through the process. Besides finding you the right mortgage, we also provide thorough information and offer resources to help you make the right decision. When you contact us, there’s no high-pressure sales pitch or demand for a quick decision. Even if you don’t know what you need, we’ll help you figure it out. We’re your mortgage helper and we’ll assist you in finding the best solution, every time.
Let’s talk about your options.
Q: Why won’t my bank do it, if others will?
A: As we all know, banks earn consistent profits, and this is no fluke. The risks they take are very minimal and they are not in business to do favors, even if you have been banking with them forever. They are strict and rigid in their approval guidelines and any deviation from their checklist of criteria often leads to a decline. Alternative lenders on the other hand, are more likely to understand your personal circumstances to base their approval decisions. They take a common sense and grounded approach to determining their risk appetite. These lenders offer a variate of solutions for bad credit mortgages.
Q: What is the approval process with these alternative lenders aka “B lenders”?
A: Surprisingly the approval process for bad credit mortgage is virtually identical and it’s just the guidelines that are more tolerant of things such as credit or debt servicing ratios. For example, you would still need to demonstrate your ability to repay the mortgage (income) via job letter, paystubs, etc. Furthermore, a bad credit mortgage is no different than a traditional mortgage, except for the more favorable guidelines that allow for individuals with credit blemishes to find suitable solutions for their mortgage needs.
Q: Am I stuck with this bad credit mortgage?
A: Actually no, a bad credit mortgage can be temporary. In fact, as your credit improves with time, you will likely be able to qualify through traditional banks. Remember if the reason/s for getting declined by the banks the first time around are improved, while all else remains the same, then you would now qualify based on their approval guidelines. Depending on the circumstances, you may only need a bad credit mortgage for a short period of time, such as a year or two. Having said that, some people remain with these lenders for the lifetime of their mortgage, but that’s not to be construed as a bad thing. For example, many self-employed individuals need these types of lenders because of the flexibility they offer in their approval process and not necessarily because of requiring a bad credit mortgage specifically. Banks, unfortunately, do not have the same type of risk tolerance for the self-employed because of the way they demonstrate their annual income. As you can see, bad credit mortgage solutions allow for greater financing opportunities through flexible and inclusive approval guidelines