Buying a Home with a Bad Credit Rating – From your Friendly Vancouver Mortgage Broker

Buying a Home with a Bad Credit Rating – From your Friendly Vancouver Mortgage Broker

Life happens. Sometimes we mess up or circumstances get beyond our control. Our credit is one of those things. It could be you simply spent way beyond your means, or maybe you got laid off from your job and fell behind. According to the stats, it happens to one out of eight of us Canadians.

But now, things have improved and you’d like to buy a home. But can you?

It’s tough but it can be done because there’s the easy way and there’s the hard way.

The Easy Way to Buy a Home with Bad Credit

If you’ve recently undergone a bankruptcy or a credit proposal and want to qualify for the best possible rates, you really only have one choice. Wait!

That’s it folks because if you don’t want to spend thousands of extra dollars in interest paying for a subprime mortgage, which is a high risk and much more expensive mortgage, you’re best strategy is to sit back and be patient.

Why? The reason is simple. Most mainstream lenders won’t even give you a glimpse until you’ve gone at least 2 years since your consumer proposal or bankruptcy discharge. Additionally, these lenders will want to see that you have a verifiable income.

Not only that, but you will have to also re-gained the confidence of lenders by having at least 2 credit sources with a minimum balance of between $1000 – $2000 credit limit. You will also have to show up to a 2 year track history of making your minimum payments and on time.

You might be wondering how the heck are you even going to get a credit card to accomplish this feat. Some banks offer what are called ‘secured’ credit cards. This simply means you will have to put down a security deposit which in most instances will guarantee that you are immediately approved. If you go this route, make sure you pick a card where the bank repays your security deposit after a certain period.

The most vital thing to remember is that all your payments need to be paid on time. This not only includes your newly acquired credit cards but all your other bills such as utilities and rent as well.

This will help you to re-establish your credit worthiness and make you more appealing to lenders. As aVancouvermortgage broker specialist, take it from me that this will help you get back into the good graces of mortgage lenders and get better rates.

The key point to remember is that it takes not only planning, but sticking to that plan. Being patient will definitely save you a lot of money on getting better interest rates.

The Hard Way to Get a Mortgage with Bad Credit

Even though you’ve declared bankruptcy or have gone through a credit proposal, maybe things have reversed enough you figure you can swing a mortgage and are determined you want to buy a home.

You still can but you face a lot more restrictions. Whether you like it or not, you’re going to be faced with a subprime mortgage which is going to cost more because it means higher interest rates.

Subprime lending has cooled considerably in the past little while as lenders have become a bit more anxious about the market. Many subprime mortgage brokers have even closed up shop. The money is still there, but you have a few extra obstacles to overcome.

First is the down payment. Most lenders are going to expect you to shell out around 25% as a down payment before they’ll even look at you. You may need to get the services of an uninsured lender to help you make up the difference.

Second you may also be required to pay either a broker or lender fee of around 1-2 % or possibly slightly more.

The best advice I can offer if you are determined to go the subprime route is to talk to aVancouvermortgage broker like myself and I can advise you much better on how to deal with your individual situation.