So you want that sprawling property with a fetching house in your ideal neighbourhood in Calgary. You have a decent job and a steady stream of income. The only problem is that you have a bad credit standing.
We all want the lowest mortgage rate but the plans of acquiring one can go down the drain when your lender pulls up your credit score and find that it’s below the ideal score. You can still get your mortgage but the rate would be different and far less ideal now that your credit standing has been revealed. After all, lending companies know and understand that not everyone can have an excellent credit score.
Lenders will categorize their clients into two – low risks and high risks. For someone with a bad credit score, you will be categorized into the latter and receive a high mortgage rate offer.
Bad Credit Mortgage Brokers in Calgary
Don’t sweat the matter out all by yourself. Look for a good mortgage broker. A mortgage broker at your beck and call can be advantageous as this professional is affiliated with different lenders. Your mortgage broker can easily look for a lender offering the best mortgage rate to people with bad credit records. This way, you are not necessarily stuck with one lender. You have options and you are able to find the best possible rate with your current situation.
Mortgage brokers can also steer you in the right financial direction so you can come up with a realistic budget and a mortgage rate that you can afford monthly. The sound financial advice of a mortgage broker can make future dealings with your mortgage easier and doable.
With the real estate market in Calgary, you’d want a mortgage broker to step in, get a pre-approval for your mortgage and give you an advantage when offering a deal to home sellers.
Changing Your Credit Score
If you are not in a particular hurry to purchase the house, you can still change your score. You can discuss this with your mortgage broker. He or she would know what tips and tricks would increase credit standing and make you a low risk in the eyes of lenders.
Slowly build your credit score back. First, pay off outstanding debts. The next ones should be paid on time. Even though it will not reflect on your credit score right away, if lenders can see you are making an effort to improve your financial credibility, they will want to improve your mortgage rate as well.
While many banks and credit card providers actually give new credit lines even to people with bad credit scores, you should not be tempted to open a new credit line in the hopes of erasing your previous credit score. Your previous accounts will still show up in reports. Additionally, multiple credit cards that are not managed well can lower your score by as much as 10 points.
Credit scores are also affected when there are a lot of inquiries to it. This is why it is important to get a mortgage broker. The mortgage broker will have access to the report and submit the details to different lenders. If you are doing it by yourself and the multiple lenders you have approached all inquires about your credit report at the same time, you risk lowering your credit score.
How to Get Good Mortgage Rates When Your Have Bad Credit
As mentioned earlier, hiring a mortgage broker can help your case immensely. The mortgage broker will tell you which lenders offer the best rates for people with bad credit. Depending on how well-acquainted your chosen mortgage broker is, you can also sidestep additional fees that may add to your expenses. If you can’t get the lowest mortgage rate possible, you might as well save some money on additional expenses.
Lenders also differ in the lowest score they are accepting so it’s great to have a mortgage broker privy to these details. You won’t have to spend so much time researching on these details.
If you have RRSP or Registered Retirement Savings Plan, your mortgage broker can also arrange for you to obtain the House Buyer’s Plan. This plan allows you to get up to $25,000 funds from your retirement plan and use it for down payment of your future home. The higher your down payment, the better your mortgage rate prospects are.
Having a bad credit score isn’t the end of the world. You can still get the house you want. You just need to team up with a reputable mortgage broker to make obtaining the house of your dreams and in a reasonable mortgage rate easier.