Even when A-lenders like banks say no to your mortgage application, you still have other options to buy a home with bad credit. If you have bad credit but enough down payment or a lot of equity in your house, a bad credit mortgage broker can help you get a bad credit mortgage. Here are the top five you should enlist the services of an experienced bad credit mortgage broker.
1. A bad credit mortgage broker may save you legwork
Your ability to secure a mortgage depends on your credit score. If you have a bad credit score or history, you’re going to find it very challenging to secure a loan. But there are other options for Canadians with bad credit history. For instance, unlocking your home’s equity can allow you to secure a bad credit mortgage.
Unfortunately, these options don’t come cheap, and you need a professional’s help. Bad credit mortgage brokers have regular contact with different A-lenders and B-lenders (private mortgage lenders), some of whom you may not know. They can also steer you (property buyer) away from lenders with unfavorable payment terms buried deep in their loan contracts.
That said, it’s not in your best interest to research before meeting with a mortgage broker. A quick way to quickly get some sense of the average mortgage rates for the specific mortgage you are applying for is to search mortgage rates online and then use a reliable mortgage calculator. Such tools will help you compare mortgage rates quickly and get actionable information when assessing a broker’s credibility.
2. Better bad credit mortgage rates
Bad credit mortgages are just like property loans from A-lenders, except they are likely to come with higher interest rates. There could be a limit to the total amount you can borrow. Also, you may be asked to make a larger down payment of at least 20% to 25% of the property’s total value compared to a 5% to 10% interest rate associated with traditional mortgages.
This is because a bad credit score could be viewed as high risk by most lenders. While private lenders may be willing to advance credit services to people with bad credit, their rates vary. Your best bet to get better bad credit mortgage rates is to consult with a mortgage broker.
Most private lenders work exclusively with bad credit mortgage brokers and depend on them to be the gatekeepers to bring clients. There’s a chance you may be to call some lenders directly and get an affordable bad credit mortgage. An experienced broker may help you get special rates from private lenders due to the overall volume of similar transactions.
3. Expert advice
As a real estate investor, you need an experienced bad credit mortgage broker who can provide property financing advice. Your mortgage broker should thoroughly explain the entire process of acquiring a bad credit mortgage, the benefits of such loans, and the potential pitfalls you should avoid. The broker can also help you compare rates and get mortgage options that could make a significant difference and potentially save you thousands of dollars (in terms of interest payments)
4. Personalized services
Personalized service is among the essential differentiating factors when choosing a mortgage broker. The mortgage broker should help smooth the way, be available whenever you need help and offer great insights throughout the entire process of acquiring a bad credit mortgage. For this reason, it is recommended to check the specific qualifications and experience of the bad credit mortgage broker before hiring.
Summary
As you can see, enlisting the services of an experienced bad credit mortgage broker makes sense if you are buying a house with bad credit. So, the next time you need a mortgage, give your broker a call to learn more about your options.
