Are you in the process of buying a home and need a mortgage?
In Canada, a down payment is required to purchase a home, which is an amount you pay as part of your purchase and is deducted from the purchase price of the home.
It is essential to take care of your credit rating to buy a house .
Many buyers turn to mortgage products to finance the purchase of their property. However, in order to be accepted, banks analyze several elements, including the credit rating.
In some cases, in addition to your mortgage, you may be able to get a renovation loan to do work on your new home.
What is a bad credit rating?
In Canada, credit rating is an essential component of lending.
The credit score allows lenders to assess your ability to use mortgage products responsibly. The score tells financial institutions whether you have paid your debts on time in the past. In other words: if you are responsible with your money.
Your credit report is thus obtained according to your credit history. The score ranges from 300 to 900, with 300 being considered a bad score. For your credit to be considered good, your score must be above 700.

To accept your mortgage application, banks will look at your credit rating, income, debt ratio, assets and job stability.
In conclusion, maintaining a good credit rating is essential if you are considering applying for a mortgage.
The credit score builds trust between you and your bank.
However, sometimes your credit rating is in bad shape. Banks will be more reluctant to give you loans for fear that you will not be able to repay them.
But don’t worry, there are solutions to get a loan even with bad credit and we will present them to you!
How do you get a mortgage with bad credit?
Here are 7 ways to get your mortgage with bad credit.
Capital outlay
Be aware that the larger your down payment, the more likely you are to be approved for a mortgage.
In the case of good credit, lenders may accept a down payment of 5%. With bad credit, lenders will accept a down payment of at least 20% or even 25% for a condo.
The mortgage lender will be more reluctant to give you a mortgage if you bring a smaller down payment.
If you have poor credit, we recommend that you save up for a down payment at a higher rate to show lenders your financial situation.
We advise you to contact our brokers to assist you in this process of down payment.
Bringing equity
If you are considering a mortgage refinance, it is possible to bring equity from your property.
What is equity?
Equity is the difference between the market value of your property and your mortgage balance. This equity is created as you make your mortgage payments, which reduce your mortgage balance and create a larger difference.
You can use your available equity in one of your properties to finance your purchase project.
We invite you to call on our mortgage brokers to assist you in this process.

Go through a subprime or private lender
Another option to consider is to turn to subprime or private lenders. This is a great option for you if you can’t wait for your credit score to improve.
A lenders (traditional loans) are distinguished from B lenders (alternative loans).
Alternative lenders are primarily for borrowers who do not meet the ideal requirements for a traditional loan. It is an ideal alternative for a borrower with bad credit or self-employed people to get a mortgage.
Theirinterest rates are often a little higher than “A” bankinterest rates. However, they allow financing where conventional lenders will not consider it.
Finally, there are also solutions with private lenders (C).
If you deal with private or subprime lenders, they will be able to give you a short-term mortgage at higher interest rates. This rate varies from 8 to 15% for a one year term. This type of loan will allow you to make no payments on the mortgage principal as long as you make the monthlyinterest payments.
It is one of the attractive options for the borrower who is unable to obtain financing through the traditional route. However, one must be careful. This becomes an ideal solution if you have the right profile and if your mortgage broker provides serious support.
Improve your credit rating
This option requires patience. You may want to consider taking some time to buy by improving your credit rating.
To do this, we recommend monitoring your payment history, using your credit card carefully by not exceeding its limit and using 35% of your credit, keeping your credit account open as long as possible and finally limiting the number of credit applications.
Type and value of the property
To have a better chance of qualifying for a mortgage with bad credit, you must prove that the property you want is of average to good quality. The lender will perform a rigorous development of your property before accepting your application to assess the risk the property represents.
Amount of your income
If your credit score is between 600 and 700, the traditional lender will be able to offer you mortgage products only if you can demonstrate a reliable income with your notices of assessment.
If you are, the lender will have to estimate your income by taking your company’s average salary.
Stable employment
Despite your poor credit, if you can show that you have a stable job, the lender is more likely to accept your application.

How to improve your credit rating?
Would you rather not take a risk and want to opt for credit score repair? We’ll give you our tips on how to do it.
Rebuild your credit
Many people think that you have to wait 7 years before you can get your rating back up. However, this time frame can be shortened if you adopt good habits.
First, determine your budget and stick to it.
Then, use your credit strategically by having only one credit card, consolidating your loan applications and varying the forms of borrowing.
Don’t ask for too much credit at once
In Canada, it is normal to apply for credit.
However, it is important not to abuse the system. If you have too many applications, banks may think you are in a bad financial situation and are trying to live beyond your means.
Control your credit applications by getting quotes from different lenders and applying for only the credit you really need.
Keep your credit history
Don’t hesitate to keep your credit history as long as possible. By keeping your credit account open longer, you will be able to positively influence your credit rating.
In fact, if your credit account is recent, your credit rating may be lower and therefore not really representative of your financial situation.
So remember to keep your old accounts open even if you don’t use them to maintain your credit history.
All outstanding accounts (collections) will need to be paid, it will not be possible to obtain financing for a purchase if you have not obtained the release confirming that the outstanding account(s) are paid.
However, it is possible in some cases to pay these accounts in collection by refinancing a property on which there is available equity and thus resolve credit problems.
Maintain a good debt to income ratio
Remember to maintain a good debt/income ratio.
This ratio indicates the ratio between your income and your debts. This allows us to evaluate your gross annual income required to pay your debts on a monthly basis. It is important not to use these credit cards at more than 60% of the authorized limit, and above all, never exceed the limit.

Debt history
We recommend that you get into the habit of monitoring your debt history. Don’t live beyond your means! Always maintain a maximum debt ratio of 40%.
If you would like information about your Bad Credit Mortgage application, please contact us to learn more about our services and benefits. We look forward to assisting you in the purchase of your new property!