Tips on How to Get Mortgage with Bad Credit!

Credit issues can come up from time to time, especially when you’ve lost your job, had an illness that kept you from your work, or just no built up credit history yet. This poses a problem for those who are thinking of buying a home, but don’t fret just yet because there may be other avenues to pursue your dream home such as making the most out of a bad credit mortgage.

How to Get Your Home with Bad Credit Mortgage

If you are determined to lock down on a house that you fancy with a bad credit, these tips may help you out.

  • Know your credit score. If you are a resident in Canada, the credit score ranges from 300 to 900. If you’ve been a good payee, have no outstanding debt to pay, or filed for bankruptcy, your score will be around 680 and up. If not, you will need to consider the following steps.
  • Look for a mortgage lender. Since you have a bad credit, instead of heading to the banks, you should approach subprime mortgage lenders which are these lending companies that do work with those with bad credit.
  • Expect higher down payment. Mortgage lenders will consider your credit score, debt levels, as well as your income to determine if you are qualified for a loan. Those who have good credit often pay around 5% down payment, but since you are applying with a bad credit, expect that your down payment will be higher.
    An upside to this is that you will be able to make a better deal when it comes with the mortgage rate with the lender.
  • Watch out for extra fees. Don’t just prepare for a higher down payment because there will be extra fees too that can to your overall cost. For instance, your lender can charge you extra because they will be the ones who will be processing your application with bad credit plus banks will not give them any commission, so there’s that. Add that cost to your total down payment, and you will be paying something extra.
  • Do not expect good mortgage rates. Another tip that you need to keep in mind is that you shouldn’t keep your hopes up that you will be getting good mortgage rates because you are working with a bad credit. If you want to get a good mortgage rate from mortgage lenders, you will need to improve your credit history by paying on time.
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