Bad Credit Mortgage In Ottawa

How Can I Qualify For A Bad Credit Mortgage?

• Prepare for a larger down payment

  Individuals with a good credit score can place down as little as 5% as a down payment. However, if your credit score is not the best, then you might need to place a down payment of somewhere between 15 – 20% of the purchase price. The more you place down as a down payment, it is more likely the lender will provide you with a preferred interest rate.

• Prove your monthly income to the lender

  Borrowers must prove their source of income to get approved for a mortgage. Lenders tend to use a formula called Gross Debt Service Ratio (GDS) and Total Debt Service Ratio (TDS) to determine if a borrower will be able to afford the monthly payment.

• Get your home appraised

  Getting your property appraised by an expert will give the lender a realistic estimate of the value of your house. Post appraisal, the lender will use a Loan-to-Value Ratio (LTV) as a tool to assess how risky the loan can be to them.

• Find a co-signer you can rely on

  Getting a family member, business partner or friend with a strong credit rating to co-sign on a mortgage will calm the nerves of the lender to approve the mortgage even if you have bad credit.

What Can A Bad Credit Mortgage Be Used For?

If your credit score is not the best, it can be a challenge to secure a mortgage, but it is not impossible. By making your regular monthly payments, you can show the lender that you can meet your financial duties. Most people utilize a bad credit mortgage to purchase a house or refinance. However, keep in mind; that you will not be able to get a low-interest rate because of your score, but if you take steps to improve your credit rating, you will be able to qualify for a low rate over time.