In the past it was very difficult to secure a home loan if you had a very low credit rating. These days, however this more so only pertains to traditional banks and lenders. I have also known many people who have struggled to obtain a mortgage and have grown hopeless about ever being able to be a home owner.
For this very reason, this article is meant to reverse this hopelessness and turn it into a discussion of how Canadians who want desperately to become home owners, yet have bad credit can still make this dream come true.
Across the country, there are many companies and mortgage groups who specialize in helping these individuals find a mortgage and buy a home. Additionally, many of these organizations also can assist home owners as they improve their credit situation while managing their home loan.
Some mortgage groups may offer a ‘trial period’ where after making your monthly payments consistently for several months, then you can secure the mortgage you need. This is also known as a home ownership training program and and while doing so you and your loved ones can enjoy settling into your home, begin building equity and ultimately improving your credit history at the same time.
Another name for this type of situation may be known as ‘lease to own homes’ – so if you are wanting to explore this possibility further, you can search for these types of arrangements which can allow you to purchase your home as soon as possible, without worrying about bad credit getting in the way.
While it is also important to realize that the better your credit is, the more favourable your mortgage terms and rates will be, you can also be more hopeful about obtaining the loan you need and not being automatically rejected. If you want to purchase a home and work towards improving your credit, this may be the way to go.
There may be times when you will want to wait until your credit has improved, however if this does not always align with our home ownership timelines. As a result of the growing number of non-traditional mortgage companies, you can seek out non-conventional mortgage loans and stick to your financial plans in a more timely fashion.
Here is a breakdown some of the credit situations that can make you a perfect fit for a non-conventional home loan in Canada.
• Are you new to Canada and classified as a ‘non-landed immigrant’?
• Do you have bad credit or less than perfect credit?
• Are you currently without a credit history?
• Have you ever filed for Bankruptcy?
• Are you self-employed and do not have income that can verified by traditional methods?
These mortgage types also can be more flexible than other loans, as the down payment amounts and criteria may be less restrictive. For example, if potential home owners can only make a down payment of 10%, then they can still meet the approval criteria if other categories such as employment stability and consistent income are present and accounted for.
These mortgages do require that borrowers can verify that they can earn enough income to meet the demands of the ongoing monthly loan payments. These non-traditional mortgage lenders are also less focused on an individual’s debt to income ration, as other lenders typically tend to do. In the end, the key here is that you will be able to repay your mortgage and you can provide documentation that will prove this to be true.
Alternatively, there are certain mortgages plans that require that you simply do have a credit rating, even if it is bad. So for those that have yet to establish any credit, these may not apply. With that being said, some times these mortgage lenders are willing to make exceptions and work with the individual to see if they are able to maintain a home loan. So it can still be in your best interests to pursue these options and see what these companies can do for you.
These days mortgages are not only provided to those individuals that have good credit. Even if you don’t think you will be a good candidate for a home loan, it is still worth looking into some of these alternative mortgage groups that offer various non-conventional mortgage to meet a variety of home owner needs. Once again, you can use these loans to help rebuild your failing credit score and improve things for you for the future.
Learning more about at all of your options can give you some more insight into which mortgage companies may exist in your specific region of the country. Don’t give up on your goal of being a home owner, there are many more possibilities today that can help you achieve your financial milestones, one at a time.
