Bad Credit Mortgage

What is a mortgage actually?

It is money borrowed from banks and other commercial lending institutions to cover the cost of a home, and pay the principal back over time with interest. This type of loan is called a mortgage. When it comes time to purchase a home, many people are unaware of all the different mortgage options from which they can choose. Purchasing a new home is stressful enough, which is why it is imperative that you understand all of the different mortgage options you have available. Regardless of whether you are a first time home-buyer or you have been down this road before, it never hurts to have information about the various programs to see if a better option exists for your needs.

Attractive mortgage rates make this an optimal time to improve credit scores. If you have equity in your home but have had credit problems, a bad credit mortgage may provide an opportunity to set things in a rightful way. If you own your home, need bridge financing or have at least 15% toward a down payment, you have mortgage options despite credit blemishes.

Those with blights on their financial records often think a mortgage with bad credit is not possible. But whether you seek a second mortgage, equity line of credit or another type of home financing loan, bad credit mortgage loans are possible and may be the best way to repair and improve credit rating.

In fact, credit rating is not an important part of a loan assessment process for a bad credit mortgage process. The result is that securing home loans with bad credit is possible when a large enough down payment is made, or the credit rating has been improved, as well as meeting the basic criteria.

The greatest long-term benefit for the borrower with bad credit is that by making regular payments on their new loan for a reasonable period of time and it will strengthen their credit score. This better credit rating will then allow the borrower to refinance the bad credit home mortgage loan at a better interest rate in the future.

The process of getting a bad credit mortgage in Canada can seem overwhelming to first time homeowners, which is why it is important to do some research and work with a mortgage broker. Many people in this day and age get by just fine without owning or leasing a car. Some can even get along with no credit cards in their wallet. However, while lots of Canadians are content to rent apartments, there is certainly a large number of Canadians that are striving towards one goal, one of home ownership. Getting a house to raise their family in. However, for those with bad credit, their prospects can seem grim. In fact, bad credit mortgages are also known as “high-risk” mortgages, because of the level of financial risk that the both the borrower and lender are taking.

There are basic concepts that come along with mortgages in Canada.

Open mortgages

It allows you to pay off your mortgage in part or in full at any time without penalties, you can select any time to renegotiate the mortgage, flexible, but comes with a very higher interest rate.

Closed mortgages

It usually has a lower interest rate but does not have the flexibility of an open mortgage. You have a fixed or variable rate for a term, and to break this mortgage before the end of term will incur some costs.

Conventional Mortgage

If you have 20 percent of the purchase price on your new home to use for a down payment, you will be able to apply for a traditional mortgage. You may not have to apply for default insurance when applying for a conventional mortgage.

High Ratio Mortgage
A high ratio mortgage is a mortgage in which a borrower places a down payment of less than 20% of the purchase price on a home. A high ratio mortgage will require mortgage insurance. Mortgage insurance is usually purchased by the lender through one of Canada’s three default insurers.

Have you been rejected by your bank, because of poor or bad credit? Notably, many big banks consider borrowers who do not have a good credit rating to be high-risk.

Moreover, the big brick and mortar lenders have all but stopped lending to clients who don’t have a great income and perfect credit. More so, with the new lending rules in force in Ontario, homeownership is beginning to get elusive for many middle-class families.

Fortunately, there are still lots of options when it comes to bad credit mortgages in Canada. There are many monoline lenders with programs geared in making the dream of homeownership a dream come true. Same is true to those who want to a refinance or renewal of their current mortgage.

Do well to contact us for all your mortgage questions. We work with all major lenders including banks, credit unions and trust companies in Canada. We also provide private lending for clients, working with private lenders with very flexible terms, fees and rates. We will work with you, understand your unique needs and no matter your credit score, provide a solution to your mortgage needs. And our services are free.

MONEYVALUE

200 Consumers Rd, Suite 700
M2J 4R4 Toronto ON
t: 416 822 5886
e: mortgage@moneyvalue.ca

https://moneyvalue.ca