Bad Credit Mortgage
When someone with poor credit, bad credit, horrible credit, or no credit applies for a mortgage loan, this is called a bad credit mortgage.
Recent policy changes are affecting Canadians' ability to get mortgage loans due to major changes in the banking industry. The challenges of getting a mortgage are much greater if your credit is less than excellent and you do not have a high income. Bad credit mortgage loans can help with these challenges.
In Canada, bad credit mortgages are typically available through alternative lenders and private mortgage lenders. Many banks, as well as other large institutions that lend money, only lend money to people with above average credit scores. While your credit may not be too bad, you can still be declined by banks when applying for a mortgage.
Even though credit scores and credit history play an important role for being approved for a mortgage from a bank, there are also many alternate options such as private lending companies and mortgage investment companies who do not require a credit check and place absolutely no importance on credit history.
A bad credit score is most likely to occur if you consistently miss payments on your mortgage, owe back taxes, have an outstanding first or second mortgage, owe debts on credit cards or department store cards, carry high revolving balances (credit utilization) or if you have filed for bankruptcy in the last 7 years. The rate and terms of a mortgage will vary depending on a person's credit history and credit score.
The strict mortgage regulations and government policy changes make it almost impossible for the average Canadian to break into the housing market. More and more people are turning to alternative lenders also known as B-lenders, private mortgage lenders, and mortgage investment corporations known as MICs.
Toronto Private mortgage has direct access to some of the most reputable and fairest alternate and private lenders in Canada.
The lenders who are also our partners are eager to get people the funds they need so they can live the lives they choose.
Our lenders will get you an approval fairly fast regardless of your credit score.
We at Toronto Private Mortgage make it our business to never put our clients at financial risk and we always advise them on the safest mortgage products along with the lowest available mortgage rates on the Canadian market.
We have funded mortgages for people all over Ontario. We have helped our clients obtain mortgages in small cities like Barrie, Brantford, Simcoe County, Ottawa, Oshawa, London, Kitchener, Waterloo,Muskoka and of course in our own city of Toronto and the GTA. Location is important to private and alternate lenders as properties in major cities and towns are easier to sell in the event that a borrower would not be able to make their mortgage payments, resulting in a power of sale or foreclosure.
We can help you obtain a mortgage no matter which part of Ontario you reside in.
When life happens and times get hard, many obstacles can stand in your way of getting a mortgage. Toronto Private Mortgage brokers will do whatever it takes to make your dreams of homeownership a reality. We don’t let things like bad credit prevent you from obtaining a mortgage. We have worked for many clients who have had to overcome these obstacles. A low credit score is not something that will stand in your way of homeownership. We always have options that can get your foot in the door, with short-term fixed-rate loans that can help you increase your credit scores and get your financial health up to speed. We will match you with the right private mortgage lenders who never require credit scores in order to fund a mortgage. Alternative lenders and private lending companies provide mortgages based on the condition of the property, marketability, and location of the property. Risk mitigation is based solely on the property rather than the clients' financial health. These types of lenders make it easy for clients who have no credit or bad credit or for people who have just arrived in Canada.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!
Recent policy changes are affecting Canadians' ability to get mortgage loans due to major changes in the banking industry. The challenges of getting a mortgage are much greater if your credit is less than excellent and you do not have a high income. Bad credit mortgage loans can help with these challenges.
In Canada, bad credit mortgages are typically available through alternative lenders and private mortgage lenders. Many banks, as well as other large institutions that lend money, only lend money to people with above average credit scores. While your credit may not be too bad, you can still be declined by banks when applying for a mortgage.
Even though credit scores and credit history play an important role for being approved for a mortgage from a bank, there are also many alternate options such as private lending companies and mortgage investment companies who do not require a credit check and place absolutely no importance on credit history.
A bad credit score is most likely to occur if you consistently miss payments on your mortgage, owe back taxes, have an outstanding first or second mortgage, owe debts on credit cards or department store cards, carry high revolving balances (credit utilization) or if you have filed for bankruptcy in the last 7 years. The rate and terms of a mortgage will vary depending on a person's credit history and credit score.
The strict mortgage regulations and government policy changes make it almost impossible for the average Canadian to break into the housing market. More and more people are turning to alternative lenders also known as B-lenders, private mortgage lenders, and mortgage investment corporations known as MICs.
Toronto Private mortgage has direct access to some of the most reputable and fairest alternate and private lenders in Canada.
The lenders who are also our partners are eager to get people the funds they need so they can live the lives they choose.
Our lenders will get you an approval fairly fast regardless of your credit score.
We at Toronto Private Mortgage make it our business to never put our clients at financial risk and we always advise them on the safest mortgage products along with the lowest available mortgage rates on the Canadian market.
We have funded mortgages for people all over Ontario. We have helped our clients obtain mortgages in small cities like Barrie, Brantford, Simcoe County, Ottawa, Oshawa, London, Kitchener, Waterloo,Muskoka and of course in our own city of Toronto and the GTA. Location is important to private and alternate lenders as properties in major cities and towns are easier to sell in the event that a borrower would not be able to make their mortgage payments, resulting in a power of sale or foreclosure.
We can help you obtain a mortgage no matter which part of Ontario you reside in.
When life happens and times get hard, many obstacles can stand in your way of getting a mortgage. Toronto Private Mortgage brokers will do whatever it takes to make your dreams of homeownership a reality. We don’t let things like bad credit prevent you from obtaining a mortgage. We have worked for many clients who have had to overcome these obstacles. A low credit score is not something that will stand in your way of homeownership. We always have options that can get your foot in the door, with short-term fixed-rate loans that can help you increase your credit scores and get your financial health up to speed. We will match you with the right private mortgage lenders who never require credit scores in order to fund a mortgage. Alternative lenders and private lending companies provide mortgages based on the condition of the property, marketability, and location of the property. Risk mitigation is based solely on the property rather than the clients' financial health. These types of lenders make it easy for clients who have no credit or bad credit or for people who have just arrived in Canada.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!
Is it possible to get approved for a mortgage with low credit scores and no credit history (newcomers)?
With today's extra strict guidelines, more and more Canadians are being turned down for mortgages. Even if your credit is excellent, but you are self-employed, you may still have difficulty obtaining a mortgage from a bank. We at Toronto Private Mortgage can often help you get the mortgage you need even if your application for a mortgage has been denied by the bank.
Diverse lenders offer different types of first, second, and even third mortgage loans to different borrowers. It is common for borrowers with excellent credit to qualify for lower interest rates than borrowers with poor or bad credit, due to missed payments on mortgage loans, tax arrears, past bankruptcies, or consumer proposals. Interest rates are determined not only by credit history but also by your income and debt ratio when it comes to mortgages or other types of loans. It is common for self-employed individuals not to declare all of their earnings, which ends up costing them more in increased interest rates. Poor credit usually leads to higher interest rates with institutional lenders.
Having a low credit score does not mean that you will not be able to get approved for a residential or commercial mortgage. Most people with a bad or low credit score can still obtain a mortgage but usually with higher interest rates.
We at Toronto Private Mortgage are dedicated to our clients and we work relentlessly to be able to provide our clients with the best mortgage products at the lowest interest rates. We can discuss all of your options and provide you with a temporary short-term mortgage with one of our private lenders to get your foot in the door and slowly transition your mortgage to an institutional lender such as a bank with lower interest rates. Once you get funded by an alternate lender and establish a decent credit history, you will be able to qualify for better interest rates and mortgage terms.
We will help you establish good credit and get your financial health back to optimal shape. Once we get you back on track, you will get approved by banks in the not-so-distant future.
Diverse lenders offer different types of first, second, and even third mortgage loans to different borrowers. It is common for borrowers with excellent credit to qualify for lower interest rates than borrowers with poor or bad credit, due to missed payments on mortgage loans, tax arrears, past bankruptcies, or consumer proposals. Interest rates are determined not only by credit history but also by your income and debt ratio when it comes to mortgages or other types of loans. It is common for self-employed individuals not to declare all of their earnings, which ends up costing them more in increased interest rates. Poor credit usually leads to higher interest rates with institutional lenders.
Having a low credit score does not mean that you will not be able to get approved for a residential or commercial mortgage. Most people with a bad or low credit score can still obtain a mortgage but usually with higher interest rates.
We at Toronto Private Mortgage are dedicated to our clients and we work relentlessly to be able to provide our clients with the best mortgage products at the lowest interest rates. We can discuss all of your options and provide you with a temporary short-term mortgage with one of our private lenders to get your foot in the door and slowly transition your mortgage to an institutional lender such as a bank with lower interest rates. Once you get funded by an alternate lender and establish a decent credit history, you will be able to qualify for better interest rates and mortgage terms.
We will help you establish good credit and get your financial health back to optimal shape. Once we get you back on track, you will get approved by banks in the not-so-distant future.
Steps you can take to get faster approval for bad credit mortgages:
Save for a large down payment- While people with a good credit score oftentimes need no more than a 5% down payment, applicants whose Credit is questionable should be prepared to provide a down payment of at least 20% to receive better interest rates and more favourable mortgage terms.
The larger the down payment the lower the interest rate you can qualify for.
Proof of income
In order to get approved for a mortgage in Canada, borrowers need to prove that their income can carry the monthly payments of the mortgage sought. The Canadian government put mortgage stress tests in place to calculate whether or not applicants can make their monthly mortgage payments without having a negative impact on other parts of their financial obligations. The formula lenders use to determine whether someone can make their mortgage payments is called GDS which stands for Gross Debt Service ratio and TDS Total Debt Service Ratio.
GDS calculates the Principal amount of the mortgage along with the interest and the property taxes along with heating costs. This amount can either be calculated monthly or yearly. Add all the costs you would pay annually and divide them
By 12 to get the monthly amount. TDS-Total debt service ratio includes everything in the GDS plus other debts such as a student loan or car loan and things like child support and other financial obligations. In order to calculate your TDS ratio, you would need to add up all of your bill payments and financial obligations for the month and the total sum would be your TDS ratio. If you calculate the amount for the year, you would need to divide the annual amount by 12.
Get an appraisal for your property
In order to qualify for a mortgage with an alternate or private lender, it is best to have an appraisal on hand.
An appraisal will provide your lender with an accurate estimate of how much the property you’re applying for the mortgage for is worth.
The Loan to Value Ratio (LTV) is often used by lenders to determine how risky a loan is after an appraisal has been performed.
Loan to value ratios (LTV) is calculated by taking the appraised value of the mortgaged property against the amount of the loan.
We have matched clients with lenders that have funded up to 90% loan to value ratio (LTV). People who have a low credit score or no credit history are usually approved for up to 80-85% Loan to value ratio LTV, so make sure that if you’re applying for a mortgage with no credit history or a low credit score, you can provide at least a 15-20% down payment.
Note: some lenders will only want to have a property appraised by certain appraisal companies as there have been many scenarios where appraisal prices have been deceptively jacked up by third-party appraisers in order to get the applicants approved for higher mortgage amounts. This has made many lenders turn to reputable and established appraisal companies.
Having a Co-Signer can help increase your chances for approval
When you apply for a mortgage with a low income or a low credit score it’s often next to impossible to get your application approved let alone looked at by institutional lenders such as National Canadian banks. Having a financially strong co-applicant at your side can immensely increase your odds for approval. Having a co-signer on your application makes lenders more sure-footed to loan you their money. Banks and Private mortgage lenders alike are in the money business, which means they sell you money at a higher rate. In order for lenders to make a profit, you will need to pay them back within a certain time frame. That’s the gist of a mortgage. This is exactly the reason why lenders have such a tedious and long interview /application process, they are screening applicants and estimating an educated calculation based on how likely the odds of you paying them back are.
The more riskier you seem to lenders the more interest they will charge you, so their risk is rewarded generously. It’s unfortunate that we live in a world where people with less favourable circumstances have to pay more interest.
Low credit and low-income applicants can use a family member or business partner as a co-signer to make lenders feel more comfortable to lend out their money. Any person that you know can act as your co-signer, maybe a friend can become your co-applicant, that person does not have to be a relative or a family member. Co-signers act as a guarantee to lenders in case the mortgage defaults because of insufficient funds and non-payment.
If you have been turned down by a bank or private mortgage lender and have someone that can co-sign for you, we will be able to get your mortgage approved. Once you sit down with us, we will walk you through the whole process and advise you on the most beneficial mortgage product/ terms and the most reputable lenders that offer the lowest rates
Note: If you do not have access to a Co-signer, Toronto Private Mortgage brokers will still be able to help you obtain a mortgage.
The larger the down payment the lower the interest rate you can qualify for.
Proof of income
In order to get approved for a mortgage in Canada, borrowers need to prove that their income can carry the monthly payments of the mortgage sought. The Canadian government put mortgage stress tests in place to calculate whether or not applicants can make their monthly mortgage payments without having a negative impact on other parts of their financial obligations. The formula lenders use to determine whether someone can make their mortgage payments is called GDS which stands for Gross Debt Service ratio and TDS Total Debt Service Ratio.
GDS calculates the Principal amount of the mortgage along with the interest and the property taxes along with heating costs. This amount can either be calculated monthly or yearly. Add all the costs you would pay annually and divide them
By 12 to get the monthly amount. TDS-Total debt service ratio includes everything in the GDS plus other debts such as a student loan or car loan and things like child support and other financial obligations. In order to calculate your TDS ratio, you would need to add up all of your bill payments and financial obligations for the month and the total sum would be your TDS ratio. If you calculate the amount for the year, you would need to divide the annual amount by 12.
Get an appraisal for your property
In order to qualify for a mortgage with an alternate or private lender, it is best to have an appraisal on hand.
An appraisal will provide your lender with an accurate estimate of how much the property you’re applying for the mortgage for is worth.
The Loan to Value Ratio (LTV) is often used by lenders to determine how risky a loan is after an appraisal has been performed.
Loan to value ratios (LTV) is calculated by taking the appraised value of the mortgaged property against the amount of the loan.
We have matched clients with lenders that have funded up to 90% loan to value ratio (LTV). People who have a low credit score or no credit history are usually approved for up to 80-85% Loan to value ratio LTV, so make sure that if you’re applying for a mortgage with no credit history or a low credit score, you can provide at least a 15-20% down payment.
Note: some lenders will only want to have a property appraised by certain appraisal companies as there have been many scenarios where appraisal prices have been deceptively jacked up by third-party appraisers in order to get the applicants approved for higher mortgage amounts. This has made many lenders turn to reputable and established appraisal companies.
Having a Co-Signer can help increase your chances for approval
When you apply for a mortgage with a low income or a low credit score it’s often next to impossible to get your application approved let alone looked at by institutional lenders such as National Canadian banks. Having a financially strong co-applicant at your side can immensely increase your odds for approval. Having a co-signer on your application makes lenders more sure-footed to loan you their money. Banks and Private mortgage lenders alike are in the money business, which means they sell you money at a higher rate. In order for lenders to make a profit, you will need to pay them back within a certain time frame. That’s the gist of a mortgage. This is exactly the reason why lenders have such a tedious and long interview /application process, they are screening applicants and estimating an educated calculation based on how likely the odds of you paying them back are.
The more riskier you seem to lenders the more interest they will charge you, so their risk is rewarded generously. It’s unfortunate that we live in a world where people with less favourable circumstances have to pay more interest.
Low credit and low-income applicants can use a family member or business partner as a co-signer to make lenders feel more comfortable to lend out their money. Any person that you know can act as your co-signer, maybe a friend can become your co-applicant, that person does not have to be a relative or a family member. Co-signers act as a guarantee to lenders in case the mortgage defaults because of insufficient funds and non-payment.
If you have been turned down by a bank or private mortgage lender and have someone that can co-sign for you, we will be able to get your mortgage approved. Once you sit down with us, we will walk you through the whole process and advise you on the most beneficial mortgage product/ terms and the most reputable lenders that offer the lowest rates
Note: If you do not have access to a Co-signer, Toronto Private Mortgage brokers will still be able to help you obtain a mortgage.
Cross-Collateral
Applicants whose’ financial circumstances will not allow them to make a down payment of 20% or more and are looking to borrow a higher loan to value ratio (LTV) should consider a second property as cross collateral.
When an additional property is added to the application, lenders are more forgiving and offer lower rates. With the added property a higher LTV can be obtained by the borrower while lenders are more forgiving with their interest rates. Lenders perceive less risk with a cross-collateral (added Property) and with a co-applicant present on a mortgage application, which results in higher mortgage amounts loaned with lower interest rates.
Bad credit mortgages can be a challenge to obtain and someone with bad credit can be discouraged from getting a mortgage entirely. Let us tell you that when one door closes, another one opens. Let Toronto Private Mortgage open that door for you and make your dreams of homeownership come true. We have worked with numerous clients who had low credit scores who are now enjoying all the benefits that followed.
We can help you no matter what your circumstance, we have custom-tailored solutions for every mortgage seeker.
Our private mortgage brokers work directly for and only for you. At Toronto private Mortgage we like to focus on one file at a time so we can devote our undivided attention to you and get you funded fast on the route with the least resistance.
When an additional property is added to the application, lenders are more forgiving and offer lower rates. With the added property a higher LTV can be obtained by the borrower while lenders are more forgiving with their interest rates. Lenders perceive less risk with a cross-collateral (added Property) and with a co-applicant present on a mortgage application, which results in higher mortgage amounts loaned with lower interest rates.
Bad credit mortgages can be a challenge to obtain and someone with bad credit can be discouraged from getting a mortgage entirely. Let us tell you that when one door closes, another one opens. Let Toronto Private Mortgage open that door for you and make your dreams of homeownership come true. We have worked with numerous clients who had low credit scores who are now enjoying all the benefits that followed.
We can help you no matter what your circumstance, we have custom-tailored solutions for every mortgage seeker.
Our private mortgage brokers work directly for and only for you. At Toronto private Mortgage we like to focus on one file at a time so we can devote our undivided attention to you and get you funded fast on the route with the least resistance.
Things to follow for a smooth closing
Once we start the mortgage application process for you, it is important to listen to the advice of the mortgage broker who is in charge of your application. In order to have a smooth and efficient experience, we recommend that you only provide us with the documents that we request from you. Never submit documents or information that was not requested from you, this can work delay your application and will only slow down the process. Different lenders require different information and documentation. When lenders require more documentation from you, they will ask your private mortgage broker at which point your broker will notify you on what documents to provide.
For safety and privacy reasons you should never submit original documentations and only provide photocopies.
For safety and privacy reasons you should never submit original documentations and only provide photocopies.
The upsides of a bad credit mortgage are:
No credit check is required- Applicants who have a low credit score have options with alternative lenders such as credit unions and trust companies also known as B-lenders. If B-lenders deny you a mortgage, other options are Private mortgage lenders. When you apply for a mortgage with a private mortgage lender and most B-lenders, you do not need to provide your credit score or prove your income. Approvals are quick and less complicated, as not a lot of documentation is required to be provided by the borrower. Applicants who are self-employed and show a low income on their income taxes will also be able to take advantage of lenders who specialize in stated income mortgages. Toronto Private Mortgage will match you with the most reputable and generous private lenders in Canada. We make it our mission to find you the lowest interest rates along with the most favourable mortgage terms so you can build your credit and eventually switch your mortgage over to a bank. Once you make your monthly mortgage payments regularly and limit your spending with credit cards, that means keeping a low credit utilization and not exceeding 30%of your credit limit, your credit score will increase and within a year or two, you will have your desired credit score at which point we can transfer your mortgage to a bank for you so you can take advantage of the low rates that banks offer.
If you carry high-interest debts at the time you are applying for a mortgage, we advise you to ask for a higher mortgage loan amount so that you can pay all your debts off and have only one single monthly payment to make, your mortgage payments.
The lenders we work with will collaborate with us at Toronto Private Mortgage to provide you with a customized solution based on your particular circumstances.
If you carry high-interest debts at the time you are applying for a mortgage, we advise you to ask for a higher mortgage loan amount so that you can pay all your debts off and have only one single monthly payment to make, your mortgage payments.
The lenders we work with will collaborate with us at Toronto Private Mortgage to provide you with a customized solution based on your particular circumstances.
The downsides of a bad credit mortgage are:
Private lending companies and alternative lenders- B-Lenders known as Credit unions and trust companies take on an increased risk by loaning out their money to people with low income and bad credit at higher interest rates to the borrower.
These types of lenders take on the associated risk involved with borrowers whose credit history and income are not optimal. The trade off is that these types of lenders charge higher interest rates for the added risks they accept from borrowers who have bad credit or a low income.
A-lenders such as Banks in 2021 charge interest rates around 1.5% to borrowers who have excellent credit and a high enough income that qualify. B-lenders like a credit union or trust company charge around 3-3.5% and Private lending companies and mortgage investment companies (MICs) charge around 5.99%-7.99% for people who do not qualify at banks. B-lenders accept stated income and Private mortgage lenders will not ask you for proof income or your credit score, so anyone with a low credit score or no credit history qualifies.
Associated fees that low credit applicants have to be ready to pay are:
Private lending companies charge lending fees that are included in the amount of the loan borrowers receive. There is usually a charge of between 1-3% of the mortgage loan amount that borrowers have to be ready to pay, however this fee will be in the mortgage loan amount that you receive.
Another fee that borrowers have to account for are the broker fees, while banks pay brokers directly and cover the broker fees for clients, private lenders do not and clients are responsible for the associated broker fees.
Toronto Private mortgage brokers will look at the clients financial situation on a case by case basis and charge a fair fee according to our clients' financial circumstances. These fees will not be charged to clients until the mortgage is funded and closed.
These types of lenders take on the associated risk involved with borrowers whose credit history and income are not optimal. The trade off is that these types of lenders charge higher interest rates for the added risks they accept from borrowers who have bad credit or a low income.
A-lenders such as Banks in 2021 charge interest rates around 1.5% to borrowers who have excellent credit and a high enough income that qualify. B-lenders like a credit union or trust company charge around 3-3.5% and Private lending companies and mortgage investment companies (MICs) charge around 5.99%-7.99% for people who do not qualify at banks. B-lenders accept stated income and Private mortgage lenders will not ask you for proof income or your credit score, so anyone with a low credit score or no credit history qualifies.
Associated fees that low credit applicants have to be ready to pay are:
Private lending companies charge lending fees that are included in the amount of the loan borrowers receive. There is usually a charge of between 1-3% of the mortgage loan amount that borrowers have to be ready to pay, however this fee will be in the mortgage loan amount that you receive.
Another fee that borrowers have to account for are the broker fees, while banks pay brokers directly and cover the broker fees for clients, private lenders do not and clients are responsible for the associated broker fees.
Toronto Private mortgage brokers will look at the clients financial situation on a case by case basis and charge a fair fee according to our clients' financial circumstances. These fees will not be charged to clients until the mortgage is funded and closed.
Bad credit mortgages can be used for:
- Purchasing any kind of property, residential or commercial properties
- Refinancing a residential property or commercial property
- Renovating a residential or commercial property
- Debt consolidation
Debt consolidation is often very beneficial to building your credit and lowering the amount of interest you pay for credit cards and other high interest loans. You can pay off all of your existing debts and pay one single low interest payment at the end of the month. This can speed up the credit building process and get you back to optimal credit scores in no time, which will eventually lead to being able to get approved by national banks with low interest rates.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!