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Bad Credit Ontario

 

Bad Credit Mortgages
Even if you have been turned down by the bank, we have a variety of alternative lenders that will gladly consider your application.

 

Alternative lenders available for Purchases, Refinances, Equity take-outs, Renewals and Debt consolidations in Canada.

 

Most banks have strict lending guidelines they must follow, leaving no room for any mistakes. So if you don't have A+ credit chances are you will be hearing "NO" quite a bit. Whether you have an outstanding collection or past bankruptcy we want to help you Get Approved!

 

Apply for a Bad Credit mortgage

 

When it comes to bad credit mortgages we offer our clients two options:

1. Assistance with rebuilding and repairing credit in order to qualify for a mortgage with a lower down payment and interest rate >>> within 6 -12 months. (See our Credit Repair Program for more details)

2. Arranging a mortgage through either an alternative mortgage lender or Private Lender at a higher rate of interest. If your credit score is lower than 540 you will need Private Funds, for purchase you will need a min. 20% down payment or for refinance the loan amount cannot exceed more than 80% of the value of the home.

We do mortgages for people who have...
Missed or late payments
Collections or judgements
Previous Bankruptcy*
Consumer Proposal*
Credit Counselling*
No Current Credit
Outstanding Income Taxes
Outstanding Property Taxes

*Those under consumer proposal, credit counselling or in bankruptcy, typically must be fully discharged prior to mortgage closing.

 

Did you know...

1. CMHC's guidelines requires you to have a 600+ credit score

2. 540 is our minimum credit score for most of our lenders (if your score is lower than this you may still qualify for private financing)
3. As long as you have at least 2 years re-established credit after bankruptcy or consumer proposal, there is a good chance you will be approved for a mortgage.

Qualifying for a Mortgage when you have bad credit NEED TO KNOWS…
Your Credit ScoreYour credit score is an important indicator of your creditworthiness. The higher your score the better chance you have at getting credit extended you. While many lenders use bureau scores to help them make lending decisions, they also take other aspects into consideration. Lenders will use your credit score to determine if you are likely to pay your bills and also help them place you with the appropriate repayment plan. For example if you have claimed bankruptcy in the past they might place you at a significantly higher interest rate.

 

Credit Reports are provided by either Equifax or TransUnion. The report will include a beacon or Fisco “score”. That score is important. Ideally you want a score of 680 or more – this is what you would need for certain programs, including $0 Down, Credit Lines, etc. (If your self employed or straight commission you need a minimum score of 700). If you’re below 600, some banks won’t lend to you. You would need to go to an Alternate Lender – who’ll charge a higher rate of interest. Also insurance companies are starting to use your score to decide how much to charge for house insurance. (how much to gouge you if your score is low!).

 

The worse your credit score the higher the interest rate you’ll pay! The worse your credit score the larger down payment you need!

 

You can get your credit report from one of the two credit Bureaus in Canada

Equifax
Transunion

 

 

How do they come up with a credit score?

It’s all +’s and – ‘s. Everything you do, or don’t do - will either be a stroke for you, or against you. Those +’s & -‘s are applied to 5 different categories. Payment History (35%), Amount Owed (30%), Length of Credit History (15%), New Credit (10%), Types of Credit in Use (10%). The computer does it, and it’s very sophisticated.

 

Bad Credit, Slow Credit or Bankruptcy

Getting a mortgage with previous credit issues is tough, Canada's major banks shy away from offering credit to clients due to risk. Most times the client has exhausted all their lending options and are forced to seek financing elsewhere. There are other alternatives. Even if you have been turned down by the bank a mortgage broker would be happy to take your application. Mortgage Brokers have access to over 50 of Canada’s top lenders, including private lenders as well as non-conforming mortgage programs to help if you have bad credit, a prior bankruptcy or other difficult situation… As long as you are discharged and have at least 2 years of re-established credit, you are ok.

 

How a Mortgage Broker can help…

Mortgage Brokers have access to numerous lending institutions and investors. They will make sure to get the best loan possible: the best interest rate, conditions, and prepayment privileges. You won't have to deal with any financial institution yourself. Brokers deal with the same lenders you're used to dealing with. Including the 'Big Banks' and Trust Companies. They deal in great volume of mortgages and pass on the savings to you. They also deal with some innovative broker-only lenders who can offer even more attractive rates and features.

 

Build / Rebuild Your Credit FAST!!!

1. Apply for a secured Credit Card (Both Parties) shared or joint credit should be avoided, separate accounts should be applied for. (Home Trust Secured VISA) is recommended.

2. You need min. three active “trade lines”. i.e. credit card, Loans and one large loan (car or RSP)

3. Don’t max out your cards – keep your utilization below 75% - this is very important – 50% max is even better. If you’re over 75% now, you can pay off some of your debt, or the quick way of fixing it is to increase your maximum limit – or both.

4. Make your monthly payments on time – put the minimum amount on auto payment. If you want to pay extra, you can do that any time during the month at your leisure.

5. Paying off your cards each month is a BAD idea! Always leave a few dollars owing. If you don’t, there’ll be no balance showing on the report – the accounts will look “inactive”.

6. If you don’t qualify for a credit a card, you can always get a secured card by putting a deposit. Try CitiFinancial ($200), Capital One ($200), Home Trust ($1,000). Most lenders want to see a minimum limit of $1,500. Don’t keep going back to the same bank applying over and over – it’s pointless! And waiting a couple of months won’t help either if that’s what they tell you.

7. Large Loan. Once you’ve got a bit of credit re-established, you’ll need to get a large loan (10k or more). Deposit it in a separate account, with monthly loan payments on auto. You’ll have to top up that account as the end of the loan nears to cover interest costs. Yes, it’s going to cost you a bit of money, but it’s a necessary evil. If you don’t, you’ll be paying higher interest on your mortgage, and insurance, costing you a lot more, or worse, you won’t qualify for a mortgage at all !!

8. An unsecured line of credit is really no different from a credit card, except it’s usually got a much higher limit and lower interest rate. You’ll apply for this once your credit score is over 680.

9. When applying for credit, always try for as much as possible. If you want to increase your limit do it when you owe very little. Don’t wait until you’re maxed out (which you’ve now learned not to do anyway – right?!!).

10. Joint Cards do nothing for the secondary cardholder. You must have your own card(s)!! Joint loans (which are not the same as credit cards) help both parties.

11. Short money for bills? If you are paying utilities where you live now – short them some money first, it doesn’t show on your bureau (unless you outright default / refuse to pay). Next on the list would be rent. Loans & cards last. Get an Overdraft as soon as you qualify – this will save a lot of problems.

 

Creditor Disputes

If you get into a dispute with a creditor, don’t simply refuse to pay it and think that’s the end of it – IT’S NOT!!!! You will apply for a loan one day only to find they stuck it on your bureau. It happens all the time. Pay the bill. Write “Paid in Protest” on the cheque. Then take it to small claims court to get your money back. It costs $150 total to file in small claims which you will ask to get back if you win. It’s not hard. Keep all your notes, receipts etc. If you loose, you’ve already paid the bill. Either way you’ve avoided bad credit.

 

Refrain from pulling your bureau unnecessarily. Again – it’s all pluses and minuses. Pulling your bureau is a minus. You can pull it a few times a year without it hurting you, but pulling it too often can hurt your score. This is one of the benefits of using a mortgage broker. They pull it once, and shop it as often as I need to without it affecting your score.

 

NOTE: Mortgages, past or present, most still do NOT show on your bureau, and do NOT help your credit. If you default on a mortgage though – that will show up – good luck getting a mortgage then!

 

Large Loan / Saving a Down Payment

For your large loan, you may wish to borrow for RRSP’s. This kills two birds with one stone, saves for your down payment and builds your credit at the same time. Better still, you’ll get half the loan back in reduced

 

Former Bankrupts

If you were just discharged and haven’t rebuilt your credit yet, you’ll need 25% down. The longer it’s been and the more credit building you’ve done the less you’ll need down. If it’s been 2yrs and you’ve completely rebuilt as per the instructions above, all programs will be available to you.

 

New Immigrants need one full year of credit /employment to access $0 down payment, otherwise they need 5% – 25% down depending on exact circumstance.

 

Good Luck and remember A good credit rating isn’t something that will happen on its’ own, it’s something you must actively pursue.

Credit Concerns Bad Credit?

This will mean higher lender fees and mortgage rates. Your credit score is an important indicator of your creditworthiness. The higher your score the better chance you have at getting credit extended you. While many lenders use bureau scores to help them make lending decisions, they also take other aspects into consideration. Lenders will use your credit score to determine if you are likely to pay your bills and also help them place you with the appropriate repayment plan. For example if you have claimed bankruptcy in the past they might place you at a significantly higher interest rate.

 

Visit our Credit Repair Centre for help on repairing or re-establishing your credit. No Charge Credit Advice! If you have any questions about your credit please fill out my feedback form here.



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