Applying for a mortgage loan can be a stressful experience, but it can be even more unnerving when you have bad credit. Many people with bad credit might not even apply for a mortgage loan for fear that they’ll be rejected. Others may think that because of their bad credit that a mortgage loan isn’t possible.
Bad credit mortgage loans are a little more difficult to secure, but there are still plenty of options. Our agents have a wealth of experience securing mortgages for people with poor credit. We are happy to work with anyone, no matter what their credit may be.
Here are some of the keys to securing a mortgage loan if you have bad credit:
Make a Larger Down Payment
When applying for a bad credit mortgage loan a larger down payment will make you more attractive to lenders. The larger a down payment you can afford the smaller your mortgage will have to be. If you can afford to put down 20% or more of the house’s value you’ll have a much better chance of being approved for a mortgage.
Be Realistic About the Type of House You Can Afford
Because a larger down payment is important to securing a bad credit mortgage loan it’s a good idea to set a price range while house hunting, based on the amount you can afford to put down. If your goal is to make a down payment of 20% then multiply the amount you can afford for a down payment by five. That will determine the maximum value of the house you can afford. Being realistic about the type of house you can afford will help you make a larger down payment, which in turn will give you better chance of being approved for a mortgage.
Find a Good Co-Signer
The best thing you can do to off-set a bad credit rating is to include a strong co-signer on your mortgage application. A co-signer is an additional borrower that is put onto the mortgage application in order to make it more appealing to lenders. You will still be responsible for making the mortgage payments, but if at anytime you miss a payment it will be up to the co-signer to make the payment for you.
If your credit is poor it’s important that your co-signer have a strong credit rating. Someone with a reliable source of income and minimal debt will also be viewed favourably by potential lenders.
Find a Bad Credit Mortgage Lender
While some lenders are hesitant to loan money to those with bad credit, there are others who specialize in these types of loans. One of the most important factors these lenders will look for is proof of sufficient income. Financial institutions will be more likely to approve a bad credit mortgage loan if they’re confident you earn enough to make your payments.
Our mortgagestogo.ca agents have great relationships with many lenders who are willing to work with people with bad credit. Because we have the ability to reach out to multiple lenders we can see what all your lending options are and find you the best rate and terms possible.