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RateSupermarket.ca > Bad credit mortgages in Canada
Bad credit mortgages in Canada
Bad credit mortgage application
Do you have bad credit and are looking for a mortgage? Why not speak to a mortgage expert.
Simply fill in your details below and we'll get a licensed mortgage agent who specializes in bad credit mortgages to contact you right away.
There are many reasons that people may have difficulty getting a mortgage in Canada, you may have taken a hit on your credit score years ago, recently moved to Canada or are self employed. It is an extremely difficult and stressful situation, but don't worry 99% of the time, there is a mortgage in Canada for you. These mortgages are called non-conforming loans or bad credit mortgages and are designed for the person that does not fit into structured loan terms, have had credit issues in the past which may have included bankruptcy or are simply buying a property that doesn't fit into portfolio of the main mortgage lenders or CMHC. Understand that there are always many variables in any mortgage application and that is especially true with bad credit mortgages in Canada.
The idea of taking out a bad credit mortgage previously scared many borrowers out of the possibility of owning a home. However, in this day and age, more borrowers are fitting into a non-conforming borrowing situation, especially with the current economic situation as lenders tighten up their borrowing criteria. When you think about it, often the idea of owning a home versus renting can drive many people to take whatever loan they can get. It is important to understand that a bad credit mortgage is not just for people that do not have good credit, they can also include:
- Self-employed and aren't able to provide evidence of their income
- Don't have a credit history
- May need a sub-prime mortgage
- Have previously been bankrupt
- May be in credit counselling
- Foreign nationals investing in a Canadian investment property
- Are looking for an alternative mortgage lender
- Recently immigrats to Canada (meaning that you have lived in Canada for less than a year)
In the past, obtaining a bad credit mortgage in Canada or anywhere else, held a negative stigma. But that has changed. With the current economic times of the world and the fact that more and more people are struggling financially, the bad credit or non-conforming mortgage is much more common place. So don’t be afraid if you do not fit into a normal lending situation. You can still obtain a mortgage that will be in your best interests. It is important that you know that there are many qualifications for a mortgage. It really does not matter much as to whether it is a good or bad credit mortgage. However, a non-conforming mortgage may take a bit more work to get done. You may additionally pay more in fees, interest and payments than if you are a conforming borrower.
When asking about a bad credit mortgage, you will need to know that there are many factors that will come into play in order to solidify your loan. The first of which is your credit score. The lender will want to know what the score is, what accounts are delinquent or slow pay as well as the accounts that you have defaulted on. On occasion, there is still a loan for you if your credit is bad. Another part of the process is your financial status. The bank will want to know if you are employed or self employed. In other words, how are you going to be able to make the payments? There is no lender available for people that have no income. Child support, alimony and other court ordered payments do constitute income but do not need to be disclosed unless you want the bank to use that information to guarantee the loan. The lender just needs to see what assets that you have and your ability to repay the loan.
The lender will additionally look at other aspects of the loan such as whether you have filed for any form of bankruptcy, whether there are any judgments or liens and whether you are ordered to pay child support or alimony. Another factor that will come into play with your potential bad credit mortgage is your family size. It is mandated that a certain portion of your income can not be used in the mortgage process. This is most often based on the children in which are under the age of eighteen and do live with you all year long.
The next factor that the lender will look at is your debt compared to your income. This is called your debt to income ratio. Most lenders will only lend if this ratio does not exceed a certain cap. Typically, your monthly obligations cannot exceed fifty percent of your income. There are exceptions to this rule. Typically, in dealing with a bad credit mortgage in Canada, the situations are taken on a case by case basis.
When the lender takes a look at all of these factors, he or she will have the ability to tell you how much you can spend on your new home. They may say that you can spend a hundred thousand dollars for your home. It will be up you to locate the new home that will fit the needs of you and your family within that certain amount or even better….LESS! Remember, you do not want to strap yourself and get into anything that you cannot afford. Chances are that you will need a down payment when obtaining your bad credit mortgage in Canada. The bigger the down payment in which you have saved, the better the chances of getting a loan that you can live with. There are many different loans on the market today. Some lenders will require that you have as little as five percent of the purchase price to put down, others will require that you put down as much as twenty percent. There are some lenders in which will allow another lender to place a second mortgage on the property instead of you putting up the down payment. Understand though that this is not commonplace with today’s economic times. It can happen, so do not be afraid to ask if you do not have the down payment saved.
Regardless of why you are looking at a bad credit mortgage, you do need to know that there are options for you. You will need to locate a lender or mortgage broker that has the ability to shop multiple lenders or even private lenders if your situation is extremely difficult. This will protect you from the possibility of your credit score lowering even more, as it can be affected by each credit check that is made. Please note your bad cedti mortgage application on RateSupermarket.ca will not include a credit check and we will simply pass your details on to a mortgage partner who will contact you right away. Make sure that you are comfortable with him or her and that they explain everything to you so that you are comfortable. Remember that purchasing a new home in Canada is a major step and a bad credit mortgage may just be the best loan for you.
