4 Tips for Getting a Mortgage When You Have Bad Credit
Matrix Mortgage Global – 4 Tips for Getting a Mortgage When You Have Bad Credit
If you have bad credit, perhaps you have been told by a well-meaning friend or family member that applying for a mortgage is out of the question for the time being. Perhaps you have made some unwise financial decisions or have been set back by circumstances that were out of your control. Whatever the reason for your poor credit, if you are ready to take the next step toward homeownership you can still do that.
You simply need to keep the following tips in mind for getting a mortgage when you have bad credit.
- Know what your credit score is.
First things first – find out what your credit score is. In Canada, you can get your credit score from Equifax or TransUnion or you can ask your mortgage broker to get it for you. You will be given a score between 300 and 900. Anything above 600 is good and you should be able to get a mortgage from a traditional lender. Below that, and you will most likely have to work with a lender who specializes in mortgages for those with poor credit. If you have recently gone through bankruptcy or consumer proposal within the last two years, you may even have to get your mortgage from a private lender. If you are working with a mortgage broker, they will have access to many types of lenders and can help you find the one that is most appropriate for your situation.
- Save a bigger down payment.
If you have bad credit, lenders will see you as a larger risk. While those with good credit may only have to put down 5%, someone who is considered riskier will often be required to put down as much as 25%. The good side to this is that by making a larger down payment, you will automatically have more equity in your home.
- Be prepared for extra fees
Besides needing a larger down payment, if you have bad credit it is likely that you will also have to pay some additional fees. Lenders will often charge an additional fee for an application for a bad credit mortgage.
- Be prepared for higher rates
If you have good credit, you should have no difficulty in getting the best rates. But lenders who take more risk on those with bad credit need to charge more to cover their risk. The good news is, that even though you may be paying higher rates now, you will be building up your credit so as long as you keep making your payments, you should be able to get a better rate once it is time to renew your mortgage.
If you have bad credit, you don’t need to let that stop you from getting a mortgage. Call the team at Matrix Mortgage Global at 1-800-429-0717 to learn more.