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If you have had financial troubles in the past, and you have a poor credit rating it does not necessarily mean a mortgage for a new home is out of reach. Maybe you went through a bad divorce, or your small business failed resulting in bankruptcy. Maybe you lost your job and defaulted on loans. Regardless of the circumstances there is still hope and talking to a mortgage broker can help you chart a course to a new home through a new mortgage giving you and your family a new future. Mortgage brokers have direct connections with hundreds of different lenders willing to lend to people with bad credit ratings.
The truth it is, these days bad credit mortgage approvals are becoming more common as the mortgage market becomes more competitive.
THE BAD MORTGAGE APPROVAL PROCESS
To get started any lender considering a bad credit mortgage application will assess the applicant to determine the level of risk.Every bank or lending agency has its own set of criteria to determine if an application should be approved. Some of the most common requirements for approval are listed here:
- A HIGHER DOWN PAYMENT - With a perfect credit rating most lenders will require at least 5% down on a new home purchase. If you have a bad credit rating that figure can jump to 15%, and the thing to remember is the more money down you provide, the better your chances for approval.
- PROOF OF INCOME - In order to qualify for any mortgage the borrower needs to provide proof of income, to prove they have the ability to pay off the loan. Lenders usually use a formula called a - Gross-Debt-Service-Ratio ( GDSR ) to determine how much of your monthly income will be used to service the mortgage. While many lenders will approve a bad credit mortgage with a GDSR of about 35%, it is recommended that home buyers keep their GDSR below 30%. This is basically the percentage of your income that needs to be used to make the payments on your mortgage every month.
- PROFESSIONAL PROPERTY APPRAISAL - If you default on your loan, the lender will have the legal right to take control of the property and sell it to recover their money. That's why the lender will require a professional appraisal. They need to be sure the property is worth more than the amount of the mortgage.
- A CO-SIGNER - If you have bad credit a lender is much more likely to approve a mortgage if you have a trusted friend or relative who is willing to cosign for you. Having a reliable co-signer reduces the lender's risk because if you are unable to make payments, the cosigner will be required to.
If you have bad credit, or no credit, you chances of securing a mortgage for a new home are still good, if you apply in the right places and take the right steps. A mortgage broker can help walk you through the process, and can improve your chances of obtaining the mortgage you need to secure a new future for you and your family.
Contact FamilLending.ca to learn more. We will assign an experienced mortgage broker to review your situation and provide a personal, no obligation consultation. You have nothing to lose and a whole new life to gain. Let us work for you by calling 1-866-941-6678