Bad Credit Mortgages

Years ago you had to go to the bank on the corner to apply for your mortgage.  Basically beg the banker for a house.  If you didn't fit the bank's criteria you didn't get approved.  Sorry about your luck.  NO!  And there really wasn't anywhere else to go.  Until now...

These days there are more lenders, more banks and more mortgage options.

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One product we specialize in is the Non-Conforming Mortgage Loan. Specifically those mortgages for clients that have past credit issues (including bankruptcy) or are buying a unique property that doesn't fit into portfolio of the major banks or CMHC.

Our Non Conforming Mortgage Loan program helps people who...

For these clients we have 2 options available (or more) and we can be very creative:

1 - First Mortgage

These programs are for clients that can verify consistent employment and income as well some slow but not really bad credit.

2 - First and Second Mortgage

This program is for exceptionally tarnished credit, previous bankruptcies, unverifiable income, self employed for less than 3  years, recent immigrants to Canada and that sort of thing. In some cases mortgage financing up to 85% of the home's value can be arranged if the house is in a populated area of 25,000 or more.  80% in most other areas.

For your options fill out our quick online form or call 1-866-592-0516.

Non-Conforming Mortgages are qualified based on the following:

Minimum Down Payment/Equity Needed

In a tough credit situation, the down payment is everything. If the mortgage loan goes in to collection, the down payment/equity provides a cushion for the lenders while they go through the legal proceeding to gain the right to reposes the home. Therefore, the lenders will look for a minimum of 15% of the value of the home in down payment/equity. (e.g. $200,000 X 15% = $ 30,000). Occasionally, exceptions are made whereby 10% down payment will be sufficient. That will depend on how the other aspects of the applicant's qualifications stack up such as income and the extent of the damage to the credit.

Income Requirements

The income requirements must be reasonable to service the loan. Reasonable in that the applicant must be working or self-employed and have income coming in. The income requirements tend to be flexible as the down payment/equity increases. The income requirements do not have to fit into the typical GDS/TDS ratio calculations. Self - employed clients quite often have to acquire their financing under this program as many do not show enough taxable income to qualify under mainstream guidelines.  Obviously the longer a client can prove consistent income the better.

Property Requirements

The property is the most important component of a tough credit mortgage loan. In essence, the lenders are lending on the value of the home and as such will be insistent that the property is a good and marketable piece of real estate. This is their security that their investment is protected in case of default. The lender must be extremely comfortable that they can recoup their investment. Their comfort comes from evaluating an appraisal of the property that must be done by an accredited appraiser. If the property does not meet with their approval, a loan will not be offered.
A property in a major urban center is easier to finance versus a farm in rural Canada. There simply are more buyers for urban properties and the chance of liquidating a reposed home is invariably easier. Properties on municipal water and sewer are easier to approve than those on well and septic.

Credit Requirements

The minimum requirement is that you have a credit rating. Different lenders have different lending thresholds. Some will insist that any outstanding bad debts be paid off before they will lend the money. Others will not care as long as the down payment/equity is increased to 20% instead of the usual 15%.  Most lenders look at an absolute minimum beacon or credit score of around 480 to 500.  More information on credit is available here.

Previously Bankrupt

If you have declared bankruptcy, you may still qualify for mortgaging. Your available down payment determines what and how much you will be approved for. CMHC requires that a previously bankrupt client be discharged a minimum of two years before an insured mortgage is offered with 5 or 10% down payment. Additionally, CMHC requires that you have re-established credit after the bankruptcy. This is not as difficult a process as it may seem. There are several lenders who will offer a secured credit card to previously bankrupt clients. Information on a secured credit card and application can be found here.

If your two year, post-bankruptcy waiting period is not yet past, you will be required to have a minimum of 15% of the purchase price, or you will be unable to get mortgage financing. The structure of the financing will be in the form of a first and second mortgage to 85% of the value of the home and rates will be higher.

Lender/Broker Fees

Most times, for good credit clients, the pays a small commission to the mortgage broker. However, in bad credit situations, the compensation for the broker for the work done in securing financing, must be paid by the client. This fee is typically paid on closing and is a percentage of the financing arranged.

Almost always, there will be fees charged by a second mortgage lender. The fee amounts are determined by the lender based on their risk evaluation. A lender may consider reducing their fee if you agree to take a higher rate, in effect, amortizing the fee over the life of the mortgage term. 

Our typical brokerage fee is 1-3% of the total financing amount.

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