How To Get Approved For a Loan With Bad Credit

Bad Credit Mortgage Loan

Getting approved for a loan with bad credit isn’t as difficult as most people think.  Bad credit generally means that you have long overdue unpaid debts. Or, you have the habit of not paying your bills or mortgages on time. Other factors that contribute to bad credit are having your credit cards or loans maxed out. Many times people neglect to make sure that their credit report is accurate.  Having pad credit can be problematic for a number of reasons.

There are ways to fix a low credit rating. The process of fixing your credit report can take a long time.  In most cases, about a year but it can often take several years to repair severely damaged credit.

Thankfully, people with bad credit can still get approved for a loan. There are people who can help! Bad credit mortgage Ontario borrowers need not worry – so long as you have someone who knows how to go about this, you can get approved for a loan.

Can You Get a Mortgage With Bad Credit in Canada?

It will be nearly impossible to get a mortgage through one of the big banks when you have bad credit. Banks check your credit rating first before your ability to repay mortgage loans. If you have a bad credit rating, chances are you will not get approved. However, there are people who specialize in helping out bad credit borrowers get approved.

For clients who are looking to purchase a home, a large down payment will dramatically improve your chances of an approval.  Likewise, existing homeowners with poor credit who are looking to borrow money require a large equity position. Both scenarios reduce the risk for the lender because they are not financing 100% of your home.  Instead, they use your equity as collateral, thereby reducing the risk of financing someone with bad credit.

In fact, there are lenders who will approve homeowners and clients looking to purchase who not only have bad credit but who also can’t prove their income.  Most alternative mortgage lenders approve clients based on the overall equity position, not their credit or income.  The best part is that the rates are very competitive and generally only moderately higher than that of a bank’s posted rate.  Just make sure you pick a broker who specializes with bad credit

How to Get a Mortgage With Bad Credit in Canada?

You can qualify for a mortgage loan and get approved when you have all the requirements that big lending institutions want.  But if you don’t tick all the boxes the big banks are looking for, you can forget about a mortgage; at least from one of the big banks.

Fortunately, the big banks aren’t the only game in town.  The first thing you will want to do is find a mortgage broker who specializes in bad credit mortgages. They will have access to a variety of lenders, products, and terms all of which cater to clients who have bad credit.

The second thing you will want to do is to make sure you have a large down payment.= when looking to purchase. Likewise, a substantial amount of equity when looking to borrow against your home.

For those who have bad credit, you will have to have at least a 20% down payment. Similarly, you will need to have a substantial amount of equity if you are looking to refinance or borrow against your home.

Because income and credit are only a secondary consideration when it comes to bad credit mortgage approvals, a lot of approvals are based on the property itself.

Lenders require borrowers to have their properties professionally appraised. This tells them the marketability of your real property. An experienced mortgage broker will guide you through this process and arrange to have your home appraised.

After the appraisal, they will check the Loan to Value Ratio to determine how risky the loan is. Most lenders will generally consider lending up to 80-85% of the appraised value of the property.

The process is simple enough, you just have to make sure that you are working with a broker who specializes in bad credit. In this way, you have an assurance that your mortgage application is being shopped around to a number of lenders instead of one or two.

A good bad credit mortgage broker will have many options. This, in itself, will improve your chances of to get a great rate and term.  The more options you have the better you will fair with your bad credit mortgage application.

Can You Refinance a Mortgage With a Bad Credit?

Bad credit borrowers who want to consolidate their debt will have a hard time with the big banks. Ironically, it doesn’t seem to matter if you have unsecured debt with a specific bank, whether they hold your mortgage or you’ve been working with them for the last 20 years.

Thankfully, again, the bank isn’t the only game in town.  An experienced mortgage broker will help you navigate the bad credit mortgage industry. They should be able to present you with a variety of options.  If you own a home with equity, a good mortgage broker will be able to get you an approval.  And, the more equity you have the better the rates and terms will likely be.

In a perfect world, your bad credit mortgage broker will help you consolidate higher-interest rate secured loans, unsecured loans, credit card debt, and anything else that may be harming your credit score.  By doing this short-term, you can turn a bad credit score into a high credit score.  The process to rehabilitate one’s credit is a by-product of how bad you let it get in the first place.

Think about your bad credit like a wound.  The longer you neglect it the worse it will become. Likewise, the more work you’ll have to do to fix things.  The moral of the story is that the sooner you begin to work on your credit, the sooner it will get better.

Just remember not all mortgages and lenders are created equal. Working with a niche brokerage, like can save you thousands of dollars and costly mistakes.

Who Are the Best Mortgage Loan Companies for Bad Credit?

There are financial institutions that do not base loan approvals entirely on a person’s credit history, credit rating, or even income. Whether your purpose is to get a new home, a second mortgage, or to refinance your home, there are alternative lenders for bad credit that can help you.

The most effective way to get approved for a bad credit mortgage is to work with an industry professional.  Mortgage brokers dealing with bad credit have connections with financial institutions that do not base loan approvals solely on a borrower’s credit rating.

These types of lenders base their decision on the property involved, not the borrower’s credit history or source of income. Big banks want perfect clients that fit in a nice little box with a bow on it.  Sadly, in today’s world, there are more people who don’t fit these criteria.

Partner with a broker to discuss the entire process including what documents you need to submit to get approved. You need someone who can give you expert advice. Your broker will walk you through the steps of the various mortgage loan offerings for bad credit.

This is where we come in. We specialize in helping bad credit borrowers get approvals for their loans. We assure you, there is a way to clear up your debts or get a new home. When you’re ready to get started, call us for a free consultation.

Get in Touch With Us

Do you need help with either home refinancing or mortgage loans? We can help! Apply Now or call us toll-free at 1-855-668-3074 so we can discuss your options.