Credit history is one of the main components of the mortgage application process. The world we live in today is very different to decades-past. Factors such as high inflation, high unemployment (especially during the COVID lockdowns), high interest rates, and very high cost of living have meant that there were times where some bills needed to be prioritized over others, which may have caused credit card/line of credit payments to be missed or even forwarded to collections agencies.
There is a common misconception that previous credit issues will automatically lead to lenders rejecting mortgage applications. Fortunately, this is often not the case. In fact, there are many lenders that specialize in offering mortgage products specifically designed for clients who have prior credit issues. The terms may not always be the most favourable (for example, higher interest rates) but that is because the lender tries to offset the perceived risk associated.
We recently helped a couple who had fallen on hard times due to a significant impact on their income as a result of COVID-19. The drop in their income created a “snowball effect”, where their debts overshadowed their income and they were on the verge of bankruptcy. By telling their story to the right lender, we helped them obtain their first mortgage since 2020.
The lenders we deal with will always take into consideration the background story/circumstances that caused credit issues and work with us towards an approval, where possible. Most of the time, these mortgages are temporary until credit is repaired and we are able to place our clients in mortgages with more attractive terms and rates down the road.
Reach out to us, and we’d be happy to help you explore your options.
