June 15, 2024

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Finance Blog

Looking for a bad credit mortgage in Canada? Here’s a quick read!

House model with real estate agent and customer discussing for contract to buy house, insurance or loan real estate background.

With the recent economic slowdown, people are finding it increasingly difficult to manage their credit bills. It is majorly due to job losses, pay cuts, business slowdown among others.

Falling short at credit payments lowers the credit score further complicating the access to finance. This causes distress among the borrowers to find alternate sources of financing like bad credit mortgages.

In Canada, firms like North East refinance mortgage with bad credit. They give sound financial advice to the borrowers to rebuild their credit scores and improve their financial management.

This article takes you through the issues around bad credit mortgage and refinancing options with professional guidance.

Let us begin!

What is a bad credit mortgage?

Bad credit mortgages are like regular mortgages but come with some caveats. They are likely to come with high-interest rates and a limit on the amount that can be borrowed.

Borrowers seek bad credit mortgages in the following cases.

  • Inability to make debt payments on time.
  • Bankruptcy proceedings
  • Consumer proposal

How can a mortgage broker help you?

  1. When a borrower’s credit rating with a bank goes bad, a broker can help the borrower by refinancing with another lender.
  2. Taking into account the borrower’s needs, income, and equity in the property, the broker can arrange for a bad credit mortgage to refinance the debt.
  3. In rare cases, the broker can secure a second mortgage at a slightly higher rate as a last resort to finance the debt.
  4. In cases of undischarged bankruptcy proceedings, a private lender is the only option left for the distressed borrower. A broker can help you transition from the original lender to a private lender and help you re-establish your credit ratings.
  5. In the case of an ongoing consumer proposal, there is a waiting period of 1 year before being able to transition to a new lender. The new lender will offer around 65% to 75% of the value of the property. After refinancing, there is a 1-2 years term to return to the original lender. A broker can help you choose good lenders and help you transition.

Precautions for choosing a mortgage broker

  • Identification of conflict of interest: A broker closely aligned with the lender might not secure you the best terms of credit.
  • Professional experience: Look for a mortgage broker with adequate professional experience in the domain.
  • Broker fee: Make sure that it is a part of the mortgage and there is no upfront fee to be paid.

Concluding thoughts

A bad credit mortgage is financial distress that is best handled with professional guidance. Choose a mortgage broker who can get you the best credit offers in a hassle-free manner.

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