Times have been getting tough in the recent past. Banks have restructured their lending terms and interest rates continue to rise. For property owners, refinancing is becoming a more and more attractive option for homeowners. However, if someone has a poor credit score, refinancing may not seem to be much of a possibility, including in Brampton Ontario Canada. It is advisable to get your credit report pulled and assessed through a mortgage broker. The broker can then discuss and secure your Brampton bad credit refinance with a lender who’s terms best fulfill your needs.
Oftentimes, people who have bad credit also have a high amount of unsecured debt. The advantage of doing a refinance is that it can save these borrowers a lot of money in interest. It gives borrowers a chance to recover from high and unfavourable rates of interest by consolidating this debt into one easy single payment.
First thing, as a borrower, you need to keep an open mind and be realistic. Do not expect to get an extremely low interest rate for refinancing, say, your mortgage. It is common to see advertisements on the media and internet from lenders saying that they can get you interest rates as low as 2%. Such interest rates are typically available for people with bad credit. In fact, if your credit score is damaged, you can be confident that you will not qualify for those interest rates. They are usually only available for borrowers with good credit.
Maintaining or having some equity in your property is something that will definitely boost your chances of being able to refinance with a lender. What this means, in layman terms, is that, as a property owner you need to make sure that what you owe on the property is lower than the property’s current value. The bigger the difference between the value of the mortgage and secured debt on the property, the higher the chance you can be refinanced. Most lenders, especially conservative lenders, will not even consider you for refinancing when you owe close to the value of your property.
An important ratio that most lenders use to assess refinancing is what is referred to as, LTV or loan-to-value ratio. This is a ratio that determines the amount of equity you have in your property and helps the lender decide if you qualify for refinancing. For example, a lender may say that you need to have 15% equity in your property in order for your refinancing to be approved. This means that the borrower’s LTV ratio has to be 85% so that the lender can offer you financing up to 85% of your property’s current market value.
Many lenders will not lend over 80% LTV without the loan being insured. Such a mortgage option allows the borrower to have an LTV ratio as high as 95%. However, with bad credit it is unlikely that a borrower will be approved for these high-ratio mortgages. If this is the case, that does not mean that it is the end of the road.
Talk to us and get your Brampton bad credit refinance approved as soon as possible to consolidate dent and improve your credit score.