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