McKay Wood helps individuals secure a mortgage with bad credit in Richmond, BC.
Having damaged credit doesn’t m mean you’ve hit a financial dead end. I can help you get approved and re-establish your financial health.
If you are looking to buy a home, but have been turned down by major banks due to bad credit scores, don’t despair. Whether a job loss, an illness, or simply a lack of credit is holding you back, you have alternative options for securing a mortgage for a new home.
There are institutional lenders and private lenders who specialize in Bad Credit Mortgage products for individuals with bad credit scores.
While it is unlikely you will be able to get the lowest possible mortgage rate if you have enough income and a large enough down payment trust companies and private lenders are more willing to take a risk on you even if you’ve been turned down by Prime Lenders.
When Do I Need a Bad Credit Mortgage Lender?
If your credit score is in the 600 to 700 range, you can usually get a credit loan from a Prime Lender. If your credit score is below 600, you will need to go through either a Subprime Lender or Private Lender. A mortgage broker can look at your financial situation and help you find a lender that will work with you and cater to your financial needs.
How Big a Down Payment Will I Need?
If you need a Bad Credit Mortgage, the general advice for a down payment is bigger is better. Even if you have bad credit, if you are able to put down a larger down payment, lenders will be more confident in their decision to lend you money because you are showing to them you can save money, and you have a bigger stake in the property you’re buying.
If you have good credit, most lenders will give you a mortgage loan with a minimum 5% down payment because you’re considered low risk. If you have bad credit, however, you will need a 20% to 25% down payment because you’re considered high risk.
Why Is a Private Lender More Willing to Take a Risk On Me?
Private lenders base their approval decision on the asset itself rather than the individual. In other words, a private lender is more interested in the value and equity of the property that serves as the collateral, rather than your credit score.
Private mortgage loans generally max out at 75% of the value of a property. As long as the house you’re interested in is appraised and rated to be average to good, you can get approved for a mortgage.
Is a Bad Credit Mortgage Worth It?
If you are considering applying for a Bad Credit Mortgage, there are many factors to consider.
For one thing, you will be subject to higher interest rates because you are considered a higher risk to lenders. You will also be required to put more money down because of the risk factor. In addition, if you have bad credit, you will most likely have additional fees that you will need to pay.
A lender can charge you 1% of the mortgage loan value for processing a bad credit application. Your broker can also tack on an extra 1% to their fees if you have credit issues.
On the other hand, having a home is a great way to start building up equity. Also, if you work with a private lender, you tend to have shorter mortgage terms.
Having shorter terms means you’ll have time to improve your credit score, pay off other debts, and if you make your monthly mortgage payments on time, you can access a lower mortgage rate when it’s time to renew your mortgage at the end of the mortgage term.
Contact McKay Wood: Top Bad Credit Mortgage Broker in Richmond
If you’re looking for help with a bad credit mortgage in Richmond, contact McKay Wood here.