Can a Bad Credit Lender Help You Obtain a Lower Interest Rate?
Most people with poor credit assume that they won't be able to secure a mortgage with a low interest rate, but this isn't always the case. While it's true that most prime lenders reserve their best rates for borrowers with near-perfect credit, there are ways to obtain a mortgage rate you can easily afford – such as working with a bad credit lender.
How Your Credit Score Affects Approval
Lenders look at a few different factors when considering an application for a new mortgage. These factors include your income and employment history, the amount of your down payment, and the value of the property you're purchasing. Perhaps the most important factor, however, is your credit score. Your credit score is a number between 300 and 900 that serves as a benchmark when determining how well you've handled debt in the past and how likely you are to repay your mortgage. The higher your credit score, the lower the interest rate you will be able to obtain. Most major banks (a.k.a. "prime lenders") will require a credit score of at least 680 before they will even consider lending to you. Even if you are approved for financing, you'll likely be charged much more interest on your home loan (15-20 percent as opposed to the 3-4 percent prime interest rate).
How a Bad Credit Lender Can Help
A bad credit lender works almost exclusively with individuals who have blemished credit histories. Even if you've undergone bankruptcy or a consumer proposal in the last few years, a bad credit lender can help you secure financing at a rate that suits your monthly budget. In fact, in many cases, working with a bad credit lender can help improve your credit score so that you can obtain a more attractive mortgage interest rate when it comes time to renew your home loan.
Come See us
If you're worried that you won't be able to obtain an affordable mortgage because of your credit score, we can help. Contact us for more information about how a bad credit lender can assist you in purchasing your dream home.