For many people with bad credit, getting approved for a
mortgage in Thornhill can seem like a painstakingly difficult process. Many
people go through the extensive paperwork and process only to find out that
their bank or other large financial institution has not approved them. Each
time your credit report is pulled for a lender to be reviewed, it can
negatively affect your credit score. It is important for all Canadians to have
an understanding of their current financial standing. To do so, obtain a copy
of your credit report and find out your credit score online. This will give you
an idea of how you have handled repaying your debts in the past, how much
credit you have available to you, and whether or not you can expect approval
from a prime lender. Most prime lenders, such as major Canadian banks,
generally do not approve people with credit scores of fewer than 600 for
mortgage loans. People with scores under 600 are considered to have bad credit.
What Does It Mean to Have Bad Credit?
A person with bad credit represents a greater risk to the lender. A bad credit
score is usually representative of a poor repayment history, which can deter
major banks and financial institutions from lending money to such individuals.
The lower the person’s credit score, the greater the perceived risk involved in
the investment. Most people are unaware of their current financial standing
unless they have been denied a credit card or other type of loan. A bad credit
mortgage gives people the opportunity to secure a mortgage and become a
homeowner, albeit at a higher interest rate.
How Do Mortgages Work?
Most mortgages are set up as secured loans, which means that you obtain the
loan by putting it against an asset that is used for collateral (in this case,
your home). The lender exchanges the sum necessary to purchase the home in
exchange for that amount, plus interest. If for any reason the mortgage
payments cannot be made, the lender will be forced to foreclose and sell the
home in order to recoup their investment. This makes it extremely important for
first time homebuyer to stay within their means and properly gauge the type of
home and mortgage they can afford. Homebuyers will be asked to make a down
payment, or a percentage of the total value of the home.
How Do I Obtain a Mortgage with Bad
You will need to be able to show steady and reliable income. The lender wants
to know that the person they are lending to will be able to make the payments,
as agreed upon in the mortgage. Also, the greater the down payment you have
saved when applying for your mortgage, the better chance you will have of
getting approved. Not only does a larger down payment help mitigate risk from
the lender’s perspective, but it shows that the homeowner has a propensity to
save money and make payments. Private lenders have been helping people with bad
credit obtain mortgage loans to purchase and refinance homes in Thornhill for
many years. Call a mortgage specialist today to find out more about how you can
get approved today.