You may be asking yourself if you’d be eligible to get a mortgage even with bad credit? The answer to this is quite simple, Yes! However, the type of mortgage you will qualify for will Depend on a few factors such as your credit profile, down payment, income, as well as a few other factors.
Will I Qualify for a Bad Credit Mortgage in Canada?
Since you probably already know that bank mortgage loans can be harder to achieve due to the level of risk you may present, you need to know that when banks aren’t an option there are other lenders that can help you, regardless of your credit or payment history.
By getting in touch with a mortgage lender who specializes in help individuals with bad credit online or in person, you will stand a much better chance of getting the pre-approval and final approval you are hoping for. A few things that these types of lenders will take into consideration are:
- Your range of income
- Type of employment – full-time, part-time, temporary, permanent, self-employed
- What type of buyer you are – a first time buyer, second time buyer, investor, etc
How Do I Qualify for a Mortgage in Canada with Less-than-Perfect Credit?
If you are concerned about qualifying for a mortgage because your credit isn’t that great, don’t be. If you have the ability to prove your income and employment stability, and that you can afford it, there are secure loans that are specifically designed for you.
However, you should know that as a high risk borrower you could be looking at mortgage rates between 5 and 20 percent. Therefore, it’s a good time to plan and save for your down payment well in advance to increase the chances of your mortgage application being approved. If you have a reliable co-signer with good credit history, this can also help you secure a lower interest rate and guarantee your approval.
Be Realistic – Stay Within Your Budget
Before you make a purchase, you’ll want to sit down and figure out a set price range, including the minimum to maximum down payment you can afford and the overall property purchase price. If you’re not that great at crunching number, a mortgage professional can help.
One thing many new buyers overlook it their debt-to-income (DTI) ratio. This is something that should also definitely be considered. For instance, you could have a high DTI and this will show lenders that you cannot afford to meet your monthly payment obligations. There are also a number of other financials that are important and need to be factored in:
- Housing expenses
- Homeowner or condo fees
- Insurances
- Interest
- Principal loan amount
- Recurring payments (alimony, child support, consumer loans, credit cards, student loans, vehicle loans, etc)
- Taxes
- Total debt ratio
Shopping Online for Bad Credit Mortgage Lenders in Canada
In today’s digital age, shopping for a bad credit mortgage expert is much easier than it used to be. Reading mortgage blogs can help you to educate yourself properly, so that you make the best decision. When you learn what mortgage leaders have to say you will develop an understanding about the different options available, including:
- Open-rate mortgage
- Variable-rate mortgage
- Fixed-rate mortgage
- Other special mortgages
Even if you’re a borrowers with good credit, bad credit or no credit at all you can still qualify. Consumer proposal or bankruptcy, don’t worry even you can qualify. Mortgage brokers can be helpful in finding you competitive rates and terms due to their large financial network connections offering numerous borrowing solutions. This alone will save you a lot of time and money.
If you’re a first time buyer with bad credit you’re wasting your time if you’re thinking of going to a bank or credit union to apply for a mortgage, they’ll probably say No. So, why not start with an alternate lender and use a mortgage broker to help you along your home buying journey.