If you have a bad credit score, you’re not alone. Poor credit or bad credit mortgage options are available in Canada.
Here in Canada, poor credit is usually anything under 650. If yours is lower than that, you’re going to run into trouble asking for any kind of loan, from bank loans to credit cards. But one of the biggest things you’ll struggle getting is a mortgage.
With a bad credit score, many mortgage lenders simply won’t lend to anyone with what they deem to be poor credit. Luckily, that’s not the case everywhere.
Find out how to get bad credit mortgages with our handy guide.
The Problem With Poor Credit and Mortgages
Your credit score shows how well you handle your monthly financial responsibilities. If yours is low, big banks will usually decline any request for financing. This is because they’re worried that you won’t be able to pay back the money they lend you.
A poor credit score makes you seem unreliable in the eyes of banks, which isn’t ideal! But, there are alternative lenders out there who are more forgiving of bad credit and will help you, even when big banks won’t.
What’s the Lowest Credit Score to Get a Mortgage?
Before looking into alternative lenders, it’s a good idea to know what’s deemed a low credit score in terms of mortgages. In Canada, you’re very likely to struggle to get a bank mortgage with any score that’s under 600, and you might even struggle if it’s less than 650. Additionally, if you’re making a downpayment of less than 20% of the property’s value you may face hurdles.
If you’re self-employed or have a low income, you’ll also need to show a higher credit score at a bank. In these cases, a score over 650 is a must. A credit score is designed as a safety net for lenders. Prepaid and monthly payment options are available with home equity loans.
What is a Bad Credit Mortgage?
There are tons of lenders out there who don’t make you go through the same processes as big banks to secure your loan. If you’re on the hunt for bad credit mortgage loans with guaranteed approval, they can be tricky to find but they’re out there! The lenders of these mortgages will take a look at the big picture, not just your credit score, and create a mortgage plan that works for you.
If you have a bad credit score, there are brilliant ways to get into the housing market! It’s easy too with help from our team at Lend Today who can help you find the right alternative for a bad credit mortgage lender.
How Can I Improve My Credit Score?
Of course, an alternative lender isn’t the only option. If you’re happy to wait a while and have the means, you can turn your credit score around and get back on track. By doing this, you’ll have access to a wide range of mortgages when you do decide to buy a home.
The best way to boost your credit score is by paying off your current debts on time, every time they’re due. If you struggle to keep track of your debts and don’t want to miss a payment, consider learning how to consolidate debt. This is when a company takes all of your loans for you and creates one lump sum for you to pay off each month, making it much simpler to pay off your debt and boost your credit score.
If you don’t have any debts but you still have a bad credit score, make sure there aren’t any errors in your file and you’re paying all of your bills on time. If nothing is amiss, you can apply for a new credit card and make small purchases on it and pay it back as soon as possible. Just make sure not to get too excited with a new credit card and only buy things that you can instantly pay off.
What About Low-Income Buyers With Good Credit Scores?
When it comes to how to buy a house with low income and good credit, you may still find it difficult. Luckily, again, there are ways to make it easier. Alternative lenders are usually the best option in this situation, just as with poor credit scores, as they won’t instantly dismiss you for having a low income.
You can also look into grants for low-income families to buy a house in Canada. Great government programs are available across Canada that help low-income households get into the housing market. A lot of the programs are aimed at first-time buyers, but there are those for families already in the real estate market too.
The grants available are different across the country but can be of great help. For example, if you live in Calgary, you should look into the Attainable Homes scheme which requires only $2,000 downpayment for buyers, and households in Saskatoon should check out these incentives. Know that wherever you live there are options and help available!
How Lend Today Can Help
At Lend Today, we help people across Canada to obtain and maintain their mortgages. If you have poor credit, we know plenty of lenders who will still consider you for a mortgage, and it’s our job to pair you with the best. With a simple application process and an experienced team, we make finding the perfect mortgage easy, no matter what situation you’re in.
Make sure to learn more about what we do, or get in touch with our team today (1-855-242-7732) with any questions you might have. At Lend Today, we’re always here to help ensure you get approved.