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Hi everyone, and welcome to another edition of Homebuyer's School, today I'm
joined by Mutjaba Syed, a mobile mortgage specialist with TD Canada Trust and
today the question we're gonna answer is, "How to get pre-approved for mortgage
with bad credit?" So Mo, there's gonna be some people that you know the credit
score isn't high enough or you know situation--life that unfortunately their
credit score isn't that great, so can you still get pre-approved for a mortgage?
Yeah that's a really good question Karl, so we understand people make mistakes
and we understand that sometimes there are certain things that can come into
your life that you didn't plan for and could impact your credit so the
different things that we can do in the whole pre-approval process is to kind of
uncover something that you might not be aware of or some current lying issues
that there might be there but your specialist should be able to work with
you if you are looking at applying and you're not currently ready yet, they should
be able to guide you and kind of coach you in getting that credit where
it needs to be or helping it to get even better, but if you really feel like this
is the time for you that you're looking at buying, there are definitely options
we can look at, you can ask a family member to help you cosign, that just
means that they're just gonna re strengthen the deal the bank will feel a
lot more comfortable if they feel there is somebody else on the deal with you and
we can keep a cosigner on the application and just kind of let you
work on your credit. Now the cosigner can always be removed after the mortgage
application, you might just need a little bit of help in the beginning once your
credit is where it needs to be we can definitely--definitely talk to the lender
or the lender can remove that cosigner at that time so it's definitely not the
end of the world but at the end of the day it shouldn't really stop you from
getting out there and getting a pre-approval because worst case scenario
at least we can start working on your credit, getting it fixed. The longer it
takes you to kind of work on those credits, the longer it takes to get into
your dream home. We want you to be able to get into your
dream home as soon as possible or find the underlying issues of stopping you
from getting into your dream home.
Does the--let's say we go back to the
cosigner--does your low credit score effect the cosigner's
credit score?
No absolutely not. So a cosigner is technically there
as more as strengthening you, they're more there to provide support to
yourself, their credit score will actually help the bank feel more
confident with your credit score and will get you help to get you into
that house sooner and I think it's a great thing for a cosigner to do--to be
able to do that to really help you out is once you get that mortgage it
actually starts helping you build that credit because the monthly payments
you're making will actually strengthen towards your credit score, so getting
that cosigner has multiple benefits, it shouldn't be something that is looked at
in a negative way. Reach out to your loved ones, reach out to your family members,
have the discussion with them, if they have any questions definitely--
definitely set that appointment up with your specialist with your cosigner that
you might have so they can go over any question that they might have. There's a
lot of uncertainty, lots of misinformation around that part but a
mortgage specialist or a lender can help you navigate any of that misinformation.
Any other ways besides having a cosigner get that pre-approval for that mortgage
or get approval for a mortgage? Anything else you can do?
Yeah absolutely, there's
many--many things that we can do. So a credit application or a mortgage
application--it's very different, it's not cookie cut, there's so many
different scenarios, strategies we can use to actually help you get approved
for mortgage, it could be a little bit more extra downpayment, it could be the
fact--we could work on reducing the amount that you're looking at being
pre-approved for mortgage, maybe we start you off on something a little bit more
comfortable for yourself and then maybe in a couple years move you up to
something that you are looking at buying, it could be a lot of different scenarios
and once again is best to talk to your specialist and to your lender and see
what options are there for you, there's multiple options, never feel like there's
only certain options for you, you should always look at all your options and see
what best fits you and your situation.
Is there like a floor for--in terms of your
credit score that you know, the bank or mortgage specialist is like "nope,
that's probably not--we're probably not gonna pre-approve you." Is there like a average
low or like a hard set amount?
Yes so average--technically the Bank of
Canada wants the Beacon score to be above 600 for any insured mortgage so
we want to be able to take a look at that. Sometimes lenders do make
exceptions, it really just depends on once again the whole financial picture.
So credit's definitely an important part but it's not the only part. We do take a look
at--to see your stability, you know with your income you might have gone through
a hardship in your life that kind of impacted your credit, it might be
something out of character for you so we will take a look at it for many
different situations and and we can change that. There's other things we
could do to get you pre-approved. Like I said we could increase the down payment,
we could do other things. We feel like the average Canadians around 640 so
technically anything around there is considered to be like a decent Beacon
score in my opinion.
Okay great, is there anything else you want to add in terms
of you know, steps to take to get a mortgage or get a pre-approved mortgage
with you know, a lower credit score?
Yeah, what I would recommend is getting
a pre-approval done as a first step so you know exactly where your credit score is
and if you--if you feel like you're confident with your credit score, it's
gonna get you into the ideal dream home, that's great but there's been many--many
instances where we've actually helped culture clients in to getting the right
perfect score, so it actually makes sense for them to kind of wait and work and do
certain things to get their credit score exactly where they need it, so it's never
the end of the world. So you might not be ready to purchase today but it will
definitely help get you to purchase a home in the future. It should never stop
you from going out and getting a pre-approval because we can always--
always work with credit.
Perfect, well thank you very much Mo, thank you
very much everyone for joining us and we'll catch you next time.
That's another edition of
Homebuyer's School.
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