You’re looking to obtain a mortgage or possibly refinance an existing one. The only issue is that you’ve had some credit problems in the last several years. While everything is current, it will take some time before those unfortunate events no longer show up on your credit reports.
Rather than thinking a mortgage is out of the question, you should talk with a professional like
Mr.Tulman best mortgage broker in Toronto. What sort of terms could you possibly get, even with damaged credit? Here are some examples of what to expect.
Options for Fixed and Variable Rates
As a broker will tell you, the fact that your credit isn’t perfect is unlikely to prevent you from being approved for a mortgage. In fact, you will have the option of going with financing that comes with a fixed rate. If you opt for this solution, there’s no doubt about what you will pay every month until the debt is paid in full.
Your other option is a variable rate mortgage. These come with a fixed term on the front, end, typically several years. After that, the rate will fluctuate based on the current average rate. Depending on what you anticipate happening with interest rates in the future, this approach could save money in the years to come.
More Emphasis on Your Recent Financial Dealings
High-risk lenders tend to focus less on credit scores and more on what’s happened in the last few years. This can be a good thing for you if you’re current on all your obligations and have been for at least the last two years. That type of track record indicates that you’re moving on from whatever happened in the past and managing your financial resources well these days.
Do take the time to go over any open accounts and make sure they’re up to date. It never hurts to make the any payments that are pending over the next few weeks. That provides time for those creditors to report your good history to the major credit bureaus and provide the lender with more incentive to do business with you.
Your Monthly Income Matters
Do expect the amount of your monthly income to play a major role in the decision. High-risk lenders, like all other lenders, do have minimum requirements for monthly income. Make sure you can provide confirmation that you meet or exceed that minimum. Doing so will help advance your application to the next level.
Higher Interest Rates – But Maybe Not as High as You Think
Since your credit is not the best, it stands to reason that the mortgage interest rate will be higher than someone with excellent credit could command. What you may not realize is that the rate is likely to be better than what you anticipated.
Even among high-risk lenders, there is competition. That’s likely to create a situation where one lender offers rates that are definitely lower than the rest.
Whether the plan is to establish the first mortgage or look into the options for the refinancing of your mortgage don’t assume that past credit problems will make you ineligible. Talk with a broker and find out what can be done. You may be pleasantly surprised at the financing terms and conditions that the right lender will extend.