There have been a number of changes to the way financial institutions are lending money in Ontario. As recently as 5 years ago, there were a number of financial mortgage options for individuals with bad credit.
In recent years the Canadian Government, banks and other major lending institutions have tightened guidelines, in many cases not granting bad credit mortgages at all. This is a good stride for the Canadian economy but that is of little consolation to those who have accumulated debt and need help.
Bad credit mortgages are still available, they are just not offered by as many retail financial institutions. Lenders, who offer bad credit mortgages, are primarily trust companies, finance companies and private lenders. Many of these institutions only lend their money through mortgage brokers.
To qualify for a bad credit mortgage you will need to have equity in your home. In most cases, bad credit mortgages will only be granted for up to 75% to 85% of the value of the home. Bad credit mortgages are also referred to as
equity mortgages.
Conversely if you need a bad credit mortgage to purchase a home, you will need 20%-25% down payment to qualify.
The typical process of applying for a bad credit mortgage is:
1.An application is made to
a mortgage broker
2.Upon approval, an appraisal will be ordered on your property
3.If the appraisal comes in at value you will sign a "mortgage commitment"
4.The file will then be sent to a real-estate lawyer to close the deal
5.You will sign with the lawyer
6.Funds will be dispersed.
The bad credit mortgage process takes about 3-4 weeks and is a great way to raise money to
consolidate debt or pay for home renovations. Bad credit mortgages often bear less interest than unsecured credit products, such as credit cards or lines of credit.
On top of that, if you use your home equity to pay off debt and build stronger credit, your bank may consider taking over your bad credit mortgage in the future. For more information about bad credit mortgages in Ontario visit www.gtamortgagematters.com
