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Getting Approved for a Mortgage in Burlington with Bad Credit

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You don’t have to allow bad credit to prevent you from owning a home or refinancing your home. In the past, banks and major lending institutions were the only viable places to secure the types of mortgage loans that have helped people become homeowners for centuries. With these large institutions tightening their standards, it has become much harder for the average person to secure a mortgage. If you have bad credit, but are still looking to secure a mortgage and become a homeowner in Burlington, there may be private lenders willing to help. Private lenders have stepped in to fill the void left by banks, helping people whom they view as high-risk clients to become homebuyers.
Homeowners can also refinance their mortgage and consolidate their debt into one simple monthly payment. Most mortgage loans are set up to be secured loans, which means the debtor pledges an asset in assurance that the payments be made in full and on time. The advantage of securing a loan against an asset, in this case the home, is that it generally allows people quicker access to more money. However, the disadvantage is that you are putting your home at risk if you cannot make the arranged payments.

What to Expect When Applying with Bad Credit

1.     Higher Minimum Down Payment
With good credit, it is possible to get a mortgage with as little as 5% down. However, with bad credit, lenders can come to expect anywhere from 15-25% of the value of your home. The higher the percentage of your down payment, the more likely you will be to qualify. This makes it important to shop around or consult a mortgage specialist to find a solution that best suits your situation.


2.     Proof of Sufficient & Consistent Income


Since you have bad credit, it is very important to be able to prove that you are financially capable of frequent home mortgage payments. For some people proving their income is simple, as they can simply review their income tax files for the past few years. However, for freelancers and other self-employed people, this can be more tricky, but not impossible.


3.     A Reliable Co-signer


Sometimes, a bank or private lender may ask for a reliable co-signer. This gives added protection to the lender and more responsibility on the part of the homeowner. The co-signer will be responsible for the mortgage if the homeowner is unable to make the payments.


4.     A Professionally Appraised Property Value


If for whatever reason mortgage payments are not made on the property, the lender will take possession of the property and sell it in order to recoup the value of the loan. Therefore, before you receive a mortgage, you will require proof from a professional appraiser documenting the potential value of the home.


You don’t have to let bad credit stop you from securing a mortgage and owning a home in Burlington. Even if your bank has denied you, you may still be eligible for financing. A mortgage specialist can help reassess your current financial standing and find a mortgage product that works for you.


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