How to get a mortgage if you have bad credit

Sometimes, a difficult past is standing in the way of a bright future. Bad credit can do that to you. After all, credit history is an integral part of the mortgage approval process. 

If you’re running into roadblocks or don’t think you can get mortgage financing, don’t give up. It is possible to get a mortgage with bad credit! And it can be a very important step in getting you back on track financially should you need to pay off a significant amount of debt.  

One of the primary advantages of working with a mortgage broker is the access you get to a wide range of lenders, including institutional and private lenders that specialize in bad credit mortgages. While the guidelines are different for each, these lenders look at your overall situation and entire credit history, and some will consider your application even after a consumer proposal or bankruptcy. For certain areas of the country, primarily large metropolitan areas, there are lenders that will lend just based on the equity in a home. 

Keep in mind that even though you will have a higher interest rate and may pay additional fees, bad credit mortgages are typically short term i.e. 1 year term. During this time, we can work together to improve your score and then look to move you to a better rate longer-term mortgage.  

If you don’t have an immediate financing need, or your situation is such that you don’t qualify with one of these lenders, there are ways you can make up for bad credit, which include:

1. Increasing your downpayment to 20 per cent or more. 
2. Asking a trusted friend or family member to be a co-signer. Your co-signer will need a good credit score and have the capacity to be responsible for the mortgage if you are unable to handle the payments.  
3. Or consider taking the time needed to repair your credit first. A much improved credit situation can save you the cost of a higher interest rate and less favourable terms. 

If your past is standing in the way of your future… get in touch with the experts at MiMortgage.ca at 866.452.1100 today and let’s chart a course to get you where you want to go.

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Easy ways to boost your credit score!

1. A secured credit card will allow you to establish or re-establish a solid credit rating. These cards require a deposit so the cardholder can never be in default.
2. Check your credit report and make sure it is accurate. If there are discrepancies, get in touch with the credit agency.
3. The single biggest factor in your credit score is having a timely bill payment history.  Don’t let a bill get past due, and never let a bill go to collections. 
4. Your score is based on your credit balance relative to your available credit. Try not to use more than 30 per cent. If your limit is $10,000, don’t let your balance go higher than $3,000.  
5. Having a credit history is important. You need a record of owing money and paying it back. Take this into consideration if are thinking of cancelling a card.

Contact the experts at MiMortgage.ca at 866.452.1100 to find out more information.

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The lowdown on the First-Time Buyer Incentive

The first-time buyer incentive, launching on September 2^nd, is a shared equity program designed to reduce mortgage payments for qualifying first-time buyers who have the minimum 5% downpayment required for an insured mortgage. The Canada Mortgage and Housing Corporation (CMHC) will provide 5% of the cost of an existing home, or 10% of a new home. This incentive isn’t payable until you sell the property and is not charged interest. 

There are a few caveats. If your household income is more than $120,000, you aren’t eligible for the program. And your total borrowed amount (including the incentive portion) can’t be more than four times your household income. With a household income of $120,000, the maximum purchase price would be approximately $505,000 with 5% down, and about $565,000 for a 15% downpayment.  

You are required to pay the incentive back after 25 years or when you sell the home, with the repayment amount based on the property’s fair market value, whether it has increased or decreased in value. If you received a 5% incentive and your $500,000 home increases in value to $600,000, then you are required to repay $30,000. If the value deceases to $450,000, you’ll repay $22,500. You can repay the incentive at any time without penalty

This new incentive program has certainly added another layer of complexity to the already complicated mortgage world. Getting expert advice throughout your mortgage years is more important than ever. 

Got a homebuying dream? Feel free to get in touch with the team at MiMortgage.ca for a review of your situation at any time! We can certainly run some numbers to determine if this is something you, or someone you know, may want to consider. 

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Happy Canada Day!

For all your mortgage financing needs, contact us at 1.866.452.1100 to speak to an expert or visit us at www.mimortgage.ca now!

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