London, Ontario · Surrounding Communities · GTA
Credit challenges can make getting a mortgage harder, but they do not always rule it out. We help London-area homebuyers and homeowners understand how lenders will look at their application and explore options that may fit their situation.
Virtual consultations for London, Ontario, surrounding communities and the GTA. All mortgages are subject to lender approval.
Mortgage Eligibility
A credit score is only one part of a mortgage application. Lenders weigh several factors together, and each lender sets its own rules.
Canadian credit scores range from 300 to 900. Lenders look at your score and at what is behind it: missed payments, collections, a consumer proposal or bankruptcy, and how recently they happened. Signs that you are rebuilding your credit can also matter.
Lenders need to see stable income that they can verify. Salaried, hourly, self-employed and commission income are documented differently, and some lenders are more flexible than others about how income is proven.
Lenders compare your housing costs and other debt payments with your income. High credit card balances, car loans or other payments can reduce how much you may qualify for, even with a good score.
A larger down payment, or more equity in your home if you are refinancing, can lower a lender’s risk. With less than 20% down, a mortgage generally must be insured, and the insurer’s rules also apply.
Federally regulated lenders must also qualify you at a “stress test” rate that is higher than your actual mortgage rate, to make sure you could manage payments if rates rise. Lenders outside federal regulation may use different qualification rules. This is one reason a decline from one lender does not always mean every lender will say no.
Your Options
Depending on your situation, options may come from different types of lenders. Each comes with its own requirements, costs and trade-offs.
Banks and many credit unions usually offer the lowest rates and the most standard terms. They also tend to have the strictest credit and income requirements, so they are often the first choice when an application can meet their rules.
Alternative (“B”) lenders, such as some trust companies, may consider applications that don’t fit bank guidelines, for example recent credit issues or harder-to-document income. Rates and fees are usually higher, and some may ask for a larger down payment.
Private lenders focus mainly on the property and your equity. Their mortgages typically cost more, often include lender and brokerage fees, and are usually short-term, commonly one or two years, with no guarantee of renewal. They are generally used as a temporary bridge.
For many borrowers, a higher-cost mortgage is meant to be temporary while credit is rebuilt, with the goal of moving to a lower-cost lender later. That is never guaranteed, so we look at the total cost and your plan to move on before you decide. Sometimes the better choice is to wait and strengthen your application first, and we will tell you if we think that is the case.
Ontario mortgage brokerages must give you written disclosures about a mortgage, including its costs, before you commit. You will always have the details in writing before you agree to proceed.
How We Help
Before you meet with us, it can help to check your credit reports. You can request your credit report for free from both of Canada’s main credit bureaus, Equifax Canada and TransUnion Canada, and ask them to correct any errors you find.
FAQs
Possibly. Lenders look at your whole application, not just your credit score. Depending on your income, debts, down payment or home equity, and the reasons behind your credit challenges, some lenders may be able to consider your application. Approval is never guaranteed and is always the lender’s decision.
There is no single minimum that applies everywhere. Each lender sets its own credit requirements, and insured mortgages (generally those with less than 20% down) must also meet the mortgage insurer’s rules. Canadian credit scores range from 300 to 900, and a higher score usually gives you more options and better terms.
It may be. Alternative and private lenders often charge higher interest rates and fees than banks, and their mortgages may have shorter terms. Before you agree to anything, we will explain the total costs, risks and trade-offs of any option in writing.
Some lenders may consider an application after a consumer proposal is completed or a bankruptcy is discharged, especially once you have started rebuilding your credit. Waiting periods and requirements vary by lender. We can review your situation and explain what may be realistic.
Federal rules set a minimum down payment based on the purchase price, and a down payment of less than 20% generally means the mortgage must be insured. Lenders outside the insured market often ask for a larger down payment, or more home equity if you are refinancing, when credit is a concern.
An initial conversation does not involve a credit check. If you decide to move forward, a credit report is usually needed to review your options, and we will ask for your consent before one is requested.
No. We serve clients in London, Ontario and surrounding communities through virtual consultations. Our brokerage office is located at 238 Britannia Rd E, Mississauga, ON L4Z 1S6.
Free Consultation
Tell us about your situation and we will follow up to schedule a virtual conversation. There is no cost for the initial consultation and no obligation.
All mortgages are subject to lender approval. Rates, terms and fees vary by lender and are not guaranteed.