When The Banks Won’t Help
Has unemployment, divorce, injury or illness affected your ability to service your debt?
Has your credit score dropped as a result?
We can help you to find the finances to buy a home when the banks won’t help. Let’s get a bad credit mortgage for you!
LoW Credit Scores
In Canada, credit scores range between 300 and 900.
If you don’t have accounts that you have failed to pay and have not declared bankruptcy, you should have a score somewhere above 680, in which case you should qualify for a mortgage from one of the traditional banks.
If your credit score is less than 600, and you want to realize your dream of buying that home, you’ll need to find yourself a sub-prime lender or a private mortgage provider.
Private mortgages are more expensive than mortgages obtained through the traditional banks, but this reflects the higher risk that the lender is taking.
Criteria for bad credit mortgages
Poor Credit Record
Gross Debt Service Ratio
If you have a poor credit record, you will find it easier to get a mortgage at an affordable interest rate if you make a larger down payment on the property of choice. This is because it reduces the risk to the lender since you have more equity in your home.
A person with a perfect credit rating can get away with a 5% down payment. You may be asked to put down between 15% to 25%.
Property appraisal – the property that you buy will serve as collateral on the loan.
If you fail to make repayments this will serve to cover the amounts outstanding on the loan.
For this reason, the lender wants to ensure that the property has sufficient value to cover the outstanding amount.
You will have to provide the lender with proof of income. No matter who the lender they’ll want the assurance that you can repay the mortgage.
Most lenders will use a gross debt to service ratio to determine whether you can afford to make the repayments that are required on the mortgage that you want.
The recommended GDSR is 30% and represents the amount of your income that you will use to make repayments. Some lenders will allow a GDSR of up to 35%.
It may be easier for you to obtain a mortgage if you can arrange for a co-signer to sign as surety on the loan.
This is because it reduces the risk to the lender.
Mortgages tailor-made to suit your needs
At Certified Mortgage Brokers, we have dozens of lenders on our books who are willing to help people with a bad credit score to buy their own homes.
Why pay rent when could be paying for your own home?