Financial troubles in your past, even if they weren’t your fault, can lead to big financial problems later, especially when trying to get a 2nd mortgage. You’ll find it’s very hard to get a good interest rate for a mortgage when you have bad credit, if you’re able to get approved at all.
Part of the reason that 2nd mortgages are more expensive with low credit is because the lender sees you as a higher risk. Even when your loan is secured with your house, interest rates can vary depending on how good your credit score is. The best private mortgage lender rates can be quite a bit lower than the worst rates, so it’s best to make sure your credit score is as high as possible. Even if you aren’t able to improve your credit before getting a private second mortgage,there are a couple things you can do to get a better private second mortgage rate.
· Increase your down payment
o Bringing more money for your down payment reduces the risk to the lender, which they reward by giving you better interest rates. The best private mortgage lendersusually ask for around 15% down payment when you have bad credit, but that number can be higher depending on how low your credit is and which lender you go to.
· Switch to verified income
o If you’re self-employed, many mortgage brokers will offer to work with your stated income, which is not verified. By going on the record with your finances, you can access lower rates.
· Get a professional property appraisal
o Some 2nd mortgage programs don’t require a property appraisal before giving you the funds. That saves you a few hundred dollars up front, but comes at a higher interest rate. It’s a good option for people who worry that an appraisal may show that your home is worthless than you believe it is, but is more expensive.
· Get a co-signer
o Bringing on a co-signer to your mortgage is an excellent and quick way to reduce your interest rate. Private mortgages for bad credit are hard to get without ac o-signer because a low score means you aren’t as financially trustworthy. A co-signer will improve private second mortgage lenders’ confidence in the deal.That being said, it’s not always easy to ask someone to become a co-signer.It’s a huge financial obligation to make, even if they won’t be responsible for the payments, because they’re at risk if you stop paying.
Without having an in-depth look at your financial situation,there’s no way to give an easy one-size-fits-all answer to how much mortgage you qualify for. We recommend using a private mortgage calculator such as this one to get a good idea of what you might qualifyfor.
Because of the nature of private mortgages, you may be surprised to hear that the best private mortgage lender in the Toronto, Mississauga, Brampton, Ajax, Milton, Caledon, Durham is someone you may have never even heard of.
There are hundreds of private mortgage lenders in Canada –even more than the number of traditional mortgage lenders. There’s so many because typically a private mortgage lender doesn’t have a lot of clients atone time – at least not as many as a bank would.Private mortgage lenders also rarely advertise.Instead, they rely on mortgage brokers to bring them business, so it’s likely you’ve never even heard of the brand before.