subject: Buying a Home with Bad Credit in Canada [print this page] Buying a Home with Bad Credit in Canada Buying a Home with Bad Credit in Canada
Many Canadians build wealth and financial security through home ownership. But how do you buy a home with bad credit? Lenders look at your credit record to determine how likely it is that you will pay back the loan. They look at your mortgage credit score, amount of debt you carry and your payment history. They also look at your income, your assets and the amount you have for a down payment. Every lender has different criteria to determine your credit worthiness. Credit rules in Canada have gotten stricter, and some borrowers that may have qualified in the early part of 2010 will no longer meet the requirements.
Having bad credit means lenders will find you a riskier investment. They may demand a higher down payment, so there is enough equity in the home should you default. They may also require a co-signer or lend you money but with high interest rates. Only borrowers with good credit scores qualify for the low posted rates.
In Canada, there is another alternative to help you get into your own home right away and start building equity. A rent to own program allows you to move into your home now while you build or repair your credit. This way, you make affordable monthly payments for a pre-set length of time. When the rental period is over, you will be able to qualify for a mortgage with your history of on-time rent payments and improved handling of credit.
The benefits to a lease to purchase home program are many:
-You get to pick the home you want (within your pre-determined price range)
-You avoid the pitfalls faced by many first time buyers, since the Rent to Own Company will appraise, inspect and negotiate the home price for you.
-You can move into your home right away and start building equity. You can build equity when the prices for real estate rise, or when you make improvements to the home.
-You can settle in, decorate, and make renovations to the home since it will be your family home.
-You pay your affordable payments and work to improve your credit score so you can qualify for better mortgage rates when the time comes.
Buying a home with bad credit can be challenging when you are dealing with banks and mortgage lenders. However, getting a rent to own home through an ethical real estate investment company can be a quicker, and smarter, way to home ownership.
