In Whitby, Ontario refinancing your mortgage can save you hundreds of dollars a month especially if you have a lot of unsecured debt such as credit cards. Potentially you could save thousands of dollars over the life of a house purchase.
The question is when is the best time to do it? If you have bad credit, but have the income the answer is the sooner the better as long as you have the equity in your property. By getting rid of the unsecured debt and paying off creditors that you may owe money to, your credit rating will increase. This means that in one or two years time, as long as you maintain all of your bills and credit lines in good standing, your credit will improve and, therefore, the opportunity to reduce your interest on any loans or mortgages will also improve.
Here are a few recommendations to to help you with your Whitby Bad Credit Refinancing:
Don’t Expect Ultra Low Interest Rates
You may have seen ads on TV, online, in newspapers, or on radio and TV offering interest rates for loans as low as 2% to 3%. However, the reality is that when it comes to bad credit situations, it is unlikely that you will get interest rates this low, especially now that interest rates have started rising in recent weeks. The very best, low interest rate mortgages are reserved for borrowers with absolutely perfect credit. However, even if your credit is a little bruised or damaged you can refinance – but just not at the cheapest rates available in the marketplace. Rates of 3-5% for people with damaged credit are still a very realistic expectation though.
You will need equity in your property
Most lenders will generally not refinance your existing mortgage if you do not have equity in your home. If you do, then refinancing should not be a problem. The reason why lenders often shy away from refinancing properties with little or no equity is because if the current market value of your home dropped, potentially, they could realise a loss if the homeowner is unable to maintain their mortgage payments. With little to no equity in the home the mortgage is considered to be “risky”. And that means that many lenders will be unwilling to issue you with a loan or new mortgage.
Also, the greater the damage to your credit, the greater the greater the interest rate and amount of equity they will want you to have in your home. Some conservative lenders may want you to have as much as 25% to 30% equity in your home in order to approve a Whitby Bad Credit Refinancing. In other words, they require the loan-to-value or LTV Ratio to be much lower.
Understand Insured Loans
It is possible to get High Ratio loans of 80% LTV or higher. However, these loans, typically through traditional banks or institutional lenders, are insured loans. Approval for these loans are based on a number of criteria, one of which is the credit rating or score.
Private lender, who can be individuals or Mortgage Investment Corporations (MICs) will lend over 80% Loan To Value, but their interest rate swill be much higher.
To find out which is the best option for you, contact you Expert Mortgage broker today!