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It’s often tougher to get a mortgage with bad credit, but it is definitely not impossible. There are several routes that Canadians who have bad credit (a credit score of under 600) can pursue to increase their odds of qualifying.
Bad Credit Institutional Lender or Private Lender?
Ratehub.ca notes that in general there are two different lender types that are willing to work with individuals with low credit scores. These include trust companies (or bad credit institutional lenders) and private lenders.
The process of obtaining a mortgage is similar to obtaining a mortgage with a traditional lender. The big differences come in who the institutions are willing to work with and how they determine whether or not an individual qualifies.
A trust company or bad credit institutional lender is a financial institution that works specifically with those who have less than stellar credit or those who have limited proof of income, according to Ratehub.ca. Trust companies often work with individuals whose credit can be as low as 550, although they typically charge higher interest rates than the prime lenders who work with borrowers with excellent credit.
Private lenders can be individuals or they can be institutional in nature. The interest rates with this type of lender are often in the double digits, but they also work with individuals whose credit scores are below 600.
Unlike a traditional lender, which often puts more weight on a potential borrower’s credit score, a bad credit institutional lender or private lender often puts more weight on the type of property and its value that an individual is interested in – probably in part because those who have lower credit scores are seen as riskier clients than those who have high credit scores.
The mortgage brokers at CVE Mortgage Group Inc. have connections with a wide range of lenders – both traditional and bad credit lenders; in order to best assist you in getting the right mortgage for you and your family. We can help you find the best mortgage option for your situation and we’re eager to do just that. Call us today to find out how.
If you have a comment about this blog post, have questions about the different mortgage types we provide or wish to ask any other questions about how to get a mortgage from CVE Mortgage Group, please feel free to contact us