Bad Credit

Mortgages and Poor Credit Scores

Homebuyers with poor credit scores are still able to obtain mortgages from lenders but the requirements are different than those applying for traditional mortgages. Rather than focus on the applicant, poor credit score lenders will examine the quality and location of the property. If the real estate you are considering is in a small town of fewer than 100,000 people, a lender may not be willing to approve your mortgage. As well, if the property is located in unattractive neighbourhoods, areas with commercial businesses nearby or in a region where property values are below $250,000 you might not be able to get a loan.

When it comes to determining how much of a mortgage you could be approved for it will depend on your credit, income and the property. If you are looking at a rural property with well and septic there is a limit of 65% of the property value that poor credit score lenders will offer.

How does it work?

If you are applying for a poor credit score mortgage, the equity and marketability of the property are key. Lenders will want to see that you have some equity in the property. They will also want proof that you are able to afford mortgage payments.

We are experts at helping homebuyers get poor credit mortgages in the Hamilton area. Our team has the experience to assist you in finding the best mortgage and refinancing solutions throughout Ontario.

There are many reasons that people end up with poor credit scores including the loss of employment, business failure, divorce, illness, car accidents and more. We understand that clients sometimes experience these setbacks. Often these situations happen when there is already a substantial debt problem and it can make the scenario worse. Due to the high interest rates that most credit cards have, making monthly payments can become difficult. This then leads to a poor credit rating.

If you find yourself in this situation don’t despair. There are ways to overcome your circumstances. Alternative mortgage refinancing can help you get out of debt and start over.

Reasons to call Dominion Lending for Poor Credit Loans

  1. For homeowners that already have equity in their home, have a quality property that is in a good location and are able to afford monthly mortgage payments, we can find you the right poor credit mortgage lender.
  2. We will not treat you disrespectfully because of your poor credit.
  3. Dominion Lending can help you rebuild financially.
  4. Our experts can find you the best mortgage products to help you get back on your feet.
  5. We promise to offer you practical advice and prompt service.
  6. You can start to repair your credit.
  7. We are by your side during the entire mortgage application process.

 

Second Mortgages

If you already have a property and a mortgage, you may find yourself in a situation where a second mortgage on the real estate is needed. Lenders see these situations are riskier than a first mortgage scenario. This is because they are in the second position on the title of the property, which means if you default, they will not be the first lender to be paid. Thus, they may not be able to earn back the full amount they lent out. Therefore, second mortgages come with higher rates.

For those homeowners that already have a mortgage, a good credit rating and over 20% equity in the property, a home equity line of credit is the best option.
For homeowners with a mortgage that have a poor credit score or less than 20% equity in the home, there are trust companies or private lenders that may be willing to offer a second mortgage.

Why get a Second Mortgage?

Homeowners that want to consolidate their debt may consider a second mortgage to help them do that. Even though these second mortgages come with higher rates they are still less than the rates offered by credit card companies, car loans or lines of credit.

One of the main benefits of consolidating debt with a second mortgage is that it can help improve your credit rating, which will improve your ability to apply for a mortgage with a prime lender.

 

How to Qualify for a Second Mortgage

There are four areas that lenders consider when you make a second mortgage application.  These are:

Equity. If you already have a substantial amount of equity in the home, it improves your chances of qualifying for a second mortgage. Large down payments are also seen as an advantage in the application process. Other ways to prove you are a good borrower including documents showing regular payments like on your utilities, cell phone, insurance, etc. You can also ask your service provider to write you a letter of support.

Income. Your ability to afford monthly mortgage payments plays a big role in the application process. Lenders like to see that you have a reliable source of income. Paystubs and letters from your employer can be a positive addition to your application.

Credit rating. The better your credit rating is, the lower the interest rates on your mortgage.

Property. Lenders see the quality and location of the property, or its marketability, as a key component in poor credit loans. This is because if you are unable to pay the mortgage, they can still get their money back with a quick sale on the home.

If you have questions about a poor credit mortgage loan, contact us today

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