Mortgage with Bad or No Credit

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Do Bad Credit Mortgages Exist? How Can I Get One?

If you have bad credit and you’ve been turned down for a mortgage by the major banks, there’s still hope: lots of home loan options exist for this class of borrowers. Many private and institutional lenders specialize in mortgage products for persons with bad credit scores, but these individuals should know that they would attract higher rates than conventional borrowers.

What do Lenders Take Into Consideration When Issuing a Bad Credit Mortgage?

For credit scores between 600 and 700, you can qualify for a loan with either a bad credit institutional lender or a prime lender. Lenders usually look at additional factors when faced with prospective borrowers who fall in-between the ranges. These factors include:

Your Income

Once you can show that you have a reliable source of income, prime lenders will still be able to work with your in-between credit score. Your income can fall into one of two classes:

      • Non-confirmable income: this is common among commission-based and self-employed persons, and it forces lenders to do an estimation of your income, based on the average for workers employed in your field
      • Confirmable income: lenders prefer this type of income, since it’s easily proven through Notices of Assessment

Down payment (for Homeowners Interested in Buying Property)

The larger your down payment in proportion to your home value, the better.  A big down payment shows lenders that you can save money and you have more at stake in the property.

Equity (for Homeowners Refinancing a Property)

Lenders will let you increase your mortgage up to a maximum loan-to-value ratio of 85 percent if you’re refinancing. Most Lenders prefer to lend when you have enough equity in your home, since a secure asset is backing the loan.

Property Value and Type

Perhaps this is the principal condition for being approved for a private mortgage or bad credit lender. The home you’re interested in must undergo a rigorous assessment and be ranked average-to-good before you can be approved for a mortgage with a bad credit lender. Lenders need to secure their investment just in case you’re incapable of keeping up with the mortgage payments, since your credit score makes it risky to lend you money.

In closing, prime lenders usually offer the best mortgage rates to borrowers with good credit scores. Private and institutional bad credit lenders have riskier customers, and they make up for this by charging higher interest rates. These lenders, however, are just as reliable as prime lenders, and can still offer you excellent mortgage products to meet your financial needs.

Bad credit or bankruptcy will lower your chances of getting a mortgage, and many lenders, including banks, will reject your mortgage application.   This does not mean it is impossible, it still possible to qualify for a mortgage and buy a home, even if your credit history is far from perfect. There are other institutions that allow bad credit mortgages.

One of the first things you will want to do if  you have bad credit is find ways to improve your credit score and seek advice from a qualified Mortgage lender or financial adviser.   You should then start to develop a plan to reduce your debit that includes evaluating your lifestyle and the money you are spending and puts any “found” money toward debt reduction.

How to get a mortgage if you have a bad credit?

There are some mortgage brokers in Canada that specialize in getting mortgages for borrowers who may find it difficult to obtain a mortgage, whether it is a bad credit score, bankruptcy, small business owners, homeowners who have built up equity but do not meet income requirements, new immigrants to Canada and first time home buyers.

One of the  lenders that specializes in helping Canadian consumers with bad credit is Home Trust and is featured in our mortgage broker section on  Home Trust is a one of Canada’s leading mortgage lenders who offer an alternative to the major banks. Most of there customers fall into a few groups; whether you have bad credit, a small business owner, new to Canada or do not meet income requirements, Home Trust understands each customer is unique, and take pride in providing a personalized, hassle-free experience, offering flexible income verification, and every application is reviewed by a person, not a computer.

If you are looking for Bad Credit Mortgages, Compare mortgage rates for 1st & 2nd Mortgages for Bad Credit with experienced Home Equity Lenders at

Vik Palan

Vik Palan

Chief Editor -

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