What is a bad credit mortgage?

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What is a bad credit mortgage?

Often termed as sub-prime mortgages, a bad credit mortgage could be defined as a home loan processed which property owners with a bad credit history are able to obtain a mortgage approval when traditional lenders and banks are not able to provide a mortgage approval. 

A sub-prime mortgage or a bad credit mortgage tends to have higher interest rates to their mortgage than what the banks and traditional lenders offer.  But why is this? To answer why this type of mortgage has such a high-interest rate is because, the lender sees the borrower, having a more than average risk rate of defaulting on monthly mortgage payments due to their repayment history with their other debts. That’s the lender charges a high-interest rate to compensate for the risk aspect of the mortgage loan. 

Below is a list of what is considered to be bad credit. Please have a look

  • Unpaid taxes and bills: If you have missed the deadline for paying your taxes or bills, then it can have a negative effect on your credit score
  • Missed mortgage payments: If you have missed your mortgage payments more than once then this can reflect on your credit score and in result create restrictions on your next mortgage
  • Overcommitted: If you have too many debts for your income and have fewer assets than your liabilities then major money lending institutions may assess you as being insolvent

For further details on bad credit, speaks with our mortgage broker. We cater to clients in the GTA area and are always here to help.

When you should opt for a bad credit mortgage?

The matter can be completely circumstantial. The general notion is if you have a bad or a low credit score, you should be thinking about increasing and improving it first rather than taking another loan. However, there are certain situations when you have to take up another loan , such as to help you with urgent financial or personal and matters that just can’t wait. These matters can involve medical emergencies, stabilizing a drowning business venture, repaying bad loans, family emergencies, etc. That is why, when you are approaching a lender for a bad credit mortgage loan, it’s very important that explain your situation, so the lender can understand why you are looking or the loan and then come up with a suitable and flexible solution.

Ways to get a bad credit mortgage: 

Having a bad credit score might make you think that you will not get a mortgage loan at all. This is because traditional money lending institutions take credit scores very seriously and if it’s in the lower quartile, chances are that you may not get the amount you’re looking for. However, there is a way to go around this problem. You can always get in touch with private lenders who consider other factors as well when considering processing a bad credit mortgage loan.  Alongside, here are some tips that can help you looking for bad credit mortgage loans a little less troublesome.

  • Check all types of bad credit mortgage options available in your area: When you are trying to find a lender who can give you a bad credit mortgage, shop around and look for options first. Contact mortgage lenders and ask for bad credit mortgage options and choose the best one which meets all your financial needs. Contact us today, we offer an extensive range of flexible plans but also advise you on what would be best as per your requirements of your current situation.
  • Co-signer: If you have a bad credit score and want a mortgage on your home, it’s better that you find a co-signer who can make part of the monthly re-payments in case you can’t. Finding a co-signor instils confidence to the lender that they will be getting their premium amount on time and as a result, it will make it easier for the loan to be processed. 
  • Make a large down payment: Sometimes investors are willing to accept a borrower with a bad credit score given he/she is willing to make a large down payment
  • See if you qualify for down payment assistance: There maybe financial assistance available in through a mortgage broker where you can offset down payment costs via credits and programs. If you can have financial assistance with the down payment of your home loan, it can be easier for you to get a loan.

How bad credit mortgage can be beneficial to you?

At first, you might think, how can bad credit mortgages have any benefits at all? With its high-interest rates and complicated processing, a bad home mortgage is the last resort for any homeowner looking for a mortgage. However, there’s always a silver lining and we are here to show you that. Here’s a list of benefits that you will get from taking up a bad mortgage loan.

No credit history check:  This is probably the greatest benefit of taking up a bad credit mortgage. When our experts will be going through your filed application, we won’t be looking at your credit scores at all. If you have a stable job with a regular income (documentation needed) and can repay the loan in time, we will be happy to process the loan for you. 

Please note, that you should have a stable job for at least one year.

Improving your credit score: You can use the funds that you get from your bad credit mortgage to pay off your debts, which in turn would increase and improve your credits score. After paying off your bad debts, financially you will be in a better position in life. 

You can request a good amount of money: Yes! Even if you have a bad credit score, in this type of loan you can ask for a good amount of money. You will be pleased to know that you will not incur any hidden costs which might catch you by surprise. 

Customizable plans:  This is where you, the client, have to clearly explain your financial situation to our experts. After noting down everything, we can create a tailored financial plan for you which will meet all your needs and at the same time ensure that you repay the loan on time on a month-by-month basis. This is a win-win situation for both parties.

Want to know more? Just call us and speak with a mortgage broker today. We will be more than glad to explain the advantages that you can gain when you apply for a bad credit mortgage loan with us. Our financial services are available to customers in the GTA area.


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