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Applying for Mortgage Loans with Bad Credit in Kitchener

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It can be difficult for people with bad credit to be approved for a mortgage loan. In Kitchener, mortgage specialists have been helping people with bad credit get approved for mortgages and home refinancing. Many people get tagged with the label of "bad credit” as a result of past financial decisions or circumstances that were beyond their control. This label can follow people around for up to a decade depending on the type of default they incurred. Often times, this label does not accurately represent a person’s current financial situation or ability to repay their debts. Perhaps you made some mistakes when you were younger or just re-establishing yourself after a rough patch, there are private lenders who can help approve you for a mortgage loan. Here are some things you should consider when applying for a mortgage with bad credit.

Higher Minimum Down Payment When Purchasing

Though people that have demonstrated good credit can make down payments of as little as 5% of the total value of the home, prospective homebuyers with bad credit should expect to be asked to put down anywhere from 10-25%. The more money the homebuyer is willing to commit to the down payment, the more likely their loan is to get approved, as this shows the ability to save money and reduces the risk of lending.

Steady Employment

When applying for a mortgage, you will likely need to show proof of steady income. This can be difficult for freelancers or self-employed people who don’t claim in their income. For those that don’t declare their income, they may be able to claim the slated income of their business. Having some job security is important to show the lenders that you will be able to make the mortgage payments on a continual basis.

Stay Within Your Means

When you enter into a secured loan agreement such as a mortgage, you are receiving the funds against you home, meaning your home is being used as collateral. If there is a failure to make your mortgage payments, you may be forced to forfeit your home, and the lender will sell it to recoup their investment. Factor in your daily and monthly expenses. Understand the terms of the agreements and be sure that you can compensate for potential fluctuations in the interest rate. Also, the amount of the mortgage that you get preapproved for does not have to dictate the type of home you purchase. Be realistic and ensure that you are staying within what you can afford.
Private lenders are helping people with bad credit get approved for mortgages in Kitchener and around the GTA. More Canadians are taking control of their financial situation and refinancing their homes to consolidate their debts. If you have bad credit and already own a home, it is possible for you to unlock the equity you have built up in your home to consolidate your debt. Bad credit does not have to stop you from becoming a first time homeowner either, but be prepared to show proof of steady income and make a down payment on a percentage of the total value. 


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