You may be thinking that getting a private mortgage for a new home is not within the realm of possibility if you’ve had financial troubles in the past. Having bad credit is often perceived as a huge deterrent when trying to get mortgage approval of any kind. However, with the right approach, getting a mortgage approved can be achieved, especially with the help of mortgage professionals.
The fact is, mortgage approval for people with bad credit is becoming increasingly common. This is partly because of the increasing competition of lenders who are in the mortgage market and partly because of other factors, such as the changing real estate climate in Canada.
So how does one get private mortgage approval with bad credit? The process for getting approved for a loan despite having bad credit begins with applying to the right lender. Note that each lender will process applications based on who they perceive to be a less risky borrower for them. This is why specific lenders each have their own criteria. Read more about the factors that can help your mortgage application below!
A Co-Signer with Good Credit
Having a reliable co-signer such as one with a good credit score can make your application more appealing to lenders because it means that someone will be willing to pay on your behalf should you be unable to do so. A good co-signer is usually a close friend or relative who won’t mind having this responsibility with you.
Property Appraisal
The value of your property is typically what the lender can expect to recover if you are unable to pay for your loan for whatever reason. It is also the basis for the amount that the lender will lend to you. For these reasons, a professional appraisal is often required when applying for any type of mortgage. Note that some lenders will also have a list of trusted appraisers and may ask for a new appraisal if you hired someone unknown to them.
Real Proof of Income
There is no way of getting around providing proof of income when applying for a mortgage because your proof of income is also proof of your ability to pay the lender. Lenders also look into your GDSR or Gross-Debt-Service-Ratio to make sure that a good portion of your income will be available for making payments. Generally speaking, lenders prefer a GDSR of less than 30% though some may be more lenient and allow as high as 45% GDSR.
Looking for a Private Mortgage in Toronto or the GTA? We can help! Contact Mortgage Central Canada today!
