Can You Get a Mortgage with Bad Credit? Advice from a Mortgage Broker in Ontario
By : Mits Kantaria
Your credit score is one of the most powerful financial tools that you have. With good credit, it’s easy to purchase a home with the lowest mortgage rates in Ontario. However, for many people, job losses, a lack of credit history, and even recent public health events have taken a toll on credit scores. Can you still get financing from mortgage lenders in Ontario? With a mortgage broker in Ontario, bad credit isn’t quite the obstacle that most think it is.
Here are the most useful tips for getting a mortgage with bad credit.
Your Credit Score and Mortgage Lenders in Ontario
Just as important as your income and current finances, your credit score will change the way that mortgage lenders in Ontario look at your application. Typically, the lowest mortgage rates in Ontario are offered to people with the highest credit scores.
For most mortgage lenders in Ontario, the tiers look like this…
- A score under 599 is considered poor with a high risk for mortgage lenders in Ontario.
- A score of 600-679 is considered fair with a moderate risk for mortgage lenders in Ontario.
- A score above 680 is considered good with a low risk for mortgage lenders in Ontario.
Credit scores and the lowest mortgage rates in Ontario are closely linked. A borrower with a score above 680 would be offered the lowest mortgage rates in Ontario, typically around 2.54% in 2022 for a 5-Year fixed mortgage. Fair credit scores see rates closer to 5%, while poor credit scores could lead to rates above 10% and sometimes approaching 18% or more.
Not having access to the lowest mortgage rates in Ontario is a big deal. For a $500,000 home with a 5% down payment, a borrower with bad credit would pay twice as much in monthly payments when compared to a borrower with good credit.
Consider if Now is the Right Time to Buy a Home
Even if you can afford repayments, a bad credit score often suggests that you should wait to buy your home. A mortgage broker in Ontario can work with you to determine your credit score, assess available interest rates, and suggests strategies to improve your score.
You can improve your credit score by:
- Paying all bills on time.
- Staying below your credit limit.
- Avoiding applying for any new credit.
- Keeping your old credit accounts open even if they are paid off.
As you maintain regular payments and decrease your debt ratio, your credit score will increase. Sometimes, delaying by even just a year will give you time to repair your credit score and get some of the lowest mortgage rates in Ontario.
A Bigger Down Payment Can Bring You Closer to the Best Mortgage Rates in Ontario
Another way to overcome bad credit and get access to the best mortgage rates in Ontario is to increase your down payment. The larger the down payment, the less risk there is for mortgage lenders in Ontario. Paying 10% or more instead of the typical 5% could make a huge difference in the rates that you are offered.
When you both rehabilitate your credit score and save longer for a down payment, you’ll be in the best position to get the best mortgage rates in Ontario for your situation.
Talk to a Mortgage broker for Access to Private Mortgage Lenders
Big banks and large lending institutions have strict criteria and are less likely to offer their best mortgage rates in Ontario to borrowers with fair or bad credit. Private mortgage lenders have more flexibility to relax the lending criteria. If you have a stable job and a strong income, despite a lower credit score, these private mortgage lenders could still offer you some of the best mortgage rates in Ontario.
When you work with a mortgage broker in Ontario, you’ll have access to private mortgage lenders that don’t engage directly with the consumer market.
How a Mortgage Broker Helps You
Bad credit can be a setback, but it isn’t the end of the road when you are working towards homeownership. With the help of a mortgage broker in Ontario, you can learn the best strategies to improve your credit. A mortgage broker in Ontario will connect you with private mortgage lenders with some of the best mortgage rates in Ontario for people with bad credit.
Your broker will:
- Work on your behalf to explore the market and find the best rates.
- Engage with lenders who are willing to work with borrowers who have less than perfect credit.
- Teach you how to rehabilitate your credit score.
- Help you find pre-approval.
- Give you fair and balanced advice so you can achieve your financial goals.
You can get a mortgage with bad credit. With some improvement in your score and a larger down payment, you could still see some of the best mortgage rates in Ontario.
Mortgage Capital Investment is available as your mortgage broker in Ontario. Talk to us today and see how homeownership is within reach, even when you feel like the market is against you.
Lowest Residential Mortgage Rates in Canada*
|Term||OUR RATE||Bank Rate|
|3 Year Fixed/ 25 yrs||4.89%||5.39%|
|3 Year Variable/ 25 yrs||5.60% Promo||5.95%|
|5 Year Fixed/ 25 yrs||4.48% Promo||5.49%|
|5 Year Variable/ 25 yrs||5.70% Promo||6.09%|
|5 Year Fixed/ 30 yrs||4.90% Promo||5.39%|
|5 Year Variable/30y||6.20%||6.35%|
Updated: February 03, 2023
* Current promotion rates may provide an additional 0.05% discount or may be anytime discontinued at the Lender discretion . Rates may vary between geographic regions and the posted rates on this website may not be available in your area. Please contact our MCI office for more details and current promotions.
LOWEST REGULAR RATES IN CANADA* * Current promotion rates may provide an additional 0.10% discount. Rates may vary between geographic regions and the posted rates on this website may not be available in your area. Please contact our MCI office for more details and current promotions.