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bad credit mortgages

How to secure poor credit loans in Canada

How to secure poor credit loans in Canada

A bad credit score doesn’t necessarily disqualify you from getting approved for a loan. Banks often have stringent approval processes, but luckily, for Canadians, they aren’t the only option. Private lenders, like Alpine Credits, can often get your loan approved based solely on the value of the equity in your home.

A bad credit mortgage refers to a mortgage loan that is granted to a borrower whose credit score may be less than ideal. In Canada, private lenders are often the ones to provide these kinds of mortgages because they do not have the same strict approval requirements that the banks have.

Rebuilding your credit score is certainly something you can achieve with a little bit of time, and a mortgage is still available to you even if you may not have the optimal credit score. No matter what your current credit score is, Alpine Credits can provide you with financial solutions that suit your situation.

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bad credit mortgages

What is a bad credit score in Canada for mortgage?

In Canada, credit scores can range from 300 to 900 points. The following table demonstrates the range of credit scores.

Excellent 760 – 900
Very Good 725 – 759
Good 660 – 724
Fair 560 – 659
Bad 300 – 559

While most Canadians aim for a good credit score or higher, Canadian banks set the expectation that future homeowners must have the “ideal” credit to qualify for a mortgage or loan. These large-scale banks usually grant loans to those who have an “optimal” credit score, from 660-900 points, but even if you meet the minimum requirement, you may find it challenging to secure a loan from a bank. While this may be the case, you still have options that may work for your situation.

Getting a mortgage with bad credit at Alpine Credits

As long as you own your home, Alpine Credits can help. We offer more flexibility with credit score requirements, easing any stresses you may have about acquiring a loan.

At Alpine Credits, you will hear back from us within 24 hours of your application. Even with bad credit, the team at Alpine Credits will try to offer instant loan approvals.

For many Canadians, the credit ranking system may not be a true reflection of their spending habits or how well they may be able to service their debt obligations. Factors such as being self-employed or simply avoiding the use of credit cards can affect a borrower’s chance of approval with a bank. Unlike the banks, Alpine Credits only considers one factor when assessing your loan application: the difference between your house value and the outstanding balance on your existing mortgage, which totals up to your home equity.

Home Equity Loan Equation

Most lenders will deliberate your income when considering your loan application. At Alpine Credits, there is consideration for a borrower’s ability to make the regular loan payments but we like to get the whole picture to understand your situation rather than just plug numbers into a calculator and see if it equals an approval. The loan is all about the equity value in your home, and as home prices continue to rise, you may be able to borrow more money than you anticipated.

Improve your chances of personal loan approval

At Alpine Credits, we realize that a person is more than their credit score and a poor credit score does not have the power to end your pursuit for a loan that you can use towards a second residence or further education. With the mortgage that Alpine Credits gives you, you have the opportunity to demonstrate that you are capable of restoring your credit score. The mortgage allows you to improve in the following areas of credit that banks typically look at, and ultimately you won’t need a bad credit mortgage.

Debt-to-income ratio

Using less than 30% of your credit limit will enhance your credit score. Periodically, you should receive messages from your bank, notifying you that you have the choice to increase your credit limit. Take the opportunity to do so when it arrives; higher limits allow for more breathing room, but recognize that augmenting your limit is not an indication that you get to swipe your plastic more often.

Credit sources

Remember that credit cards are not your only credit source and that other lenders are too. However, the more lenders that you have yet to repay, the more your credit score may be at risk of falling.

Credit history

Your oldest credit card, which ideally is your first, can vouch for your character. Banks and lenders can see your spending habits on any of your credit cards, and if you have a good track record of making payments on time with your original credit card, you are likely within good standing.

Payment history

Perhaps the best thing you can do to improve your credit score is to pay more than the minimum requirement before the due date. Figure out how much you can reasonably pay and then make sure you don’t miss the payment date.

Uses for a personal loan, even with bad credit, in Canada

Purchasing a property

You do not even have to live in the property for the loan to be qualified. It could be a summerhouse or an Airbnb that you can make an income out of.

Refinancing a property

You may wish to refinance your property if your credit score has lowered since your original mortgage. The likelihood of you getting a mortgage with bad credit approved at the bigger banks is low, but Alpine Credits can help unlock your home equity.

Renovating your home

Whether for emergencies or simply upgrading your home, your home equity is one of the best options. The interest rates will be lower compared to credit cards, and mortgage lenders like Alpine Credits will be able to meet your specific financial needs.

Consolidating debt

In a way, a bad credit mortgage is debt consolidation as you can use the loan to pay off all your outstanding dues. All the accumulated high interest can be condensed to one low interest loan.

Repairing credit history

A bad credit mortgage is a great way to consolidate your debt and gives you the opportunity to repair your credit score. As your credit score improves, you will feel more financially free, but it will also help you be approved for more loans that are substantial in the future.

Can you get a mortgage with bad credit?

Even if you are already a homeowner, your financial circumstances may have changed which may prevent you from obtaining new or secondary financing from your bank. Since banks require a good credit score for mortgage(s), your best option may be to take a home equity loan from an alternative lender. You can use those funds towards another property, investing in a business, to consolidate debts or towards your child’s education.

If you are curious about taking out a loan, one of the Financial Solutions Specialists at Alpine Credits would be happy to walk you through your options and determine the best path forward for your financial situation. Come complete our simple application and we’ll be in touch to have a no obligation discussion about what options are available to you.

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