Bad credit mortgages are a better solution for those with not so good credit and turned around by the bank. Bad credit means a significant factor is affecting your credit score. Factors such as bankruptcy, collections, a consumer proposal can drastically affect your credit score negatively. Credit scores can range from 300 to 900. Anything under 680 would be categorized under the bad credit stack, however, some lenders do make exceptions. Usually, with a credit score under 680, there is no other route to take than a bad credit mortgage.
How is a bad credit mortgage different?
A bad credit mortgage is different than a standard mortgage in two ways: First off, credit plays an important role when applying for a mortgage. Depending on your credit score, it determines what kind of lender you can apply to. With a perfect credit score, you can approach the bank without any doubt. Banks typically look for those with credit scores above 680.
With a score less than 680, your option will be to see a mortgage broker who can find an alternative solution for your mortgage needs. Mortgage brokers have access to hundreds of lender institutions and resources, giving you the opportunity to receive the lowest interest rate there is for your situation.
The second reason why a bad credit mortgage is different than a standard one is the interest rate. Good credit typically helps to lock in the best interest rate available at the time. Those getting a bad credit mortgage usually end up paying a higher interest rate. The better the credit score, the lower interest you pay and vice versa.
A bad credit mortgage gives individuals the opportunity to still get approved for a mortgage but with higher risk.
What is the risk?
The amount a client will pay and interest rate is determined by the risk level the client represents to the lender. Usually, mortgage brokers who specialize in bad credit mortgages will determine the interest rate by looking at the level of risk the borrower brings in. Mortgage brokers make it fair and look at the different situations so that it works out in the best interest of the client. Someone with bad credit might get better interest than someone who just filed for bankruptcy. Additionally, a mortgage broker will take in consideration the client’s income so that they never miss a payment. In any situation, the mortgage broker works for the best of the client, not the bank.
What we offer
- Bad credit second mortgages
- Bad credit HELOC
- Bad credit mortgage refinancing
- Bad credit mortgage debt consolidation
We have been helping Canadians with bad credit find solutions for their mortgage needs since 2004! Give us a call today @ 1 (888) 704-1255 to find the best alley for you.