But while private lenders will consider bad credit applications, it also doesn’t mean that they have no interest in your credit either.
Bad credit typically refers to a low credit score which can be due to a combination of things such as late payments, debt write offs, judgements, excessive inquires, consumer proposals, and even bankruptcies.
When a person’s credit score drops below a level that will allow them to be approved at a bank, then a private mortgage can be the next best option.
The private lender once again will consider an application with low credit, but will be interested in the what’s going on with your credit profile at the time of application. For instance, if you have had problems in the past with your credit that has impacted your score, but now you are up to date on everything, then a private lender would likely be very interested in your application.
With respect to mortgage refinancing with bad credit, the borrower may or may not have a choice in getting a new mortgage to pay out an existing loan.
For instance, the current mortgage lender may not be prepared to renew an expired term in which case the borrower needs to seek out a new mortgage and due to having bad credit, a private lender may be able to assist.
In other circumstances where additional capital is required for some reason, a borrower with bad credit can consider a mortgage refinancing to secure a higher loan to value mortgage, or perhaps secure a private second mortgage in order to continue to take advantage of the interest rate that is being charged on the first mortgage versus paying it out with a higher cost mortgage.
A Private mortgage is typically for a period of one year which will provide you with some time to improve your credit profile to a level sufficient for a lower rate, longer term bank or institutional mortgage.
While the rate will likely be higher with a private mortgage, the monthly cash flow requirement can actually become reduced, even in situations where mortgage refinancing results in a larger mortgage amount outstanding. This is due to interest only payments typically being required by private lenders. With no principal repayment required during the loan term, the monthly payment can become lower, which may provide some cash flow relief as well.
As mentioned earlier, if you have a low credit score, but are up to date on all your debts, there is likely going to be some solid interest from private lenders to finance your needs.
And more severe degrees of bad credit can also potential be mortgage financed, but the rates and terms are going to be in keeping with the risk to the lender.
If you are in need of bad credit mortgage refinancing solution, I suggest that you give me a call so we can go through your situation and discuss potential private mortgage options that may be available to you.