It is also known as a B-mortgage, bad credit mortgage, or subprime mortgage.
These are mortgage solutions designed for individuals who cannot secure a mortgage with a traditional lender because of a poor credit profile or income. Traditional lenders follow strict underwriting criteria for income, credit score, credit history, and qualification ratios.
Anyone who does not fit any of these guidelines is considered a good candidate for alternative mortgage products.
You need income, a minimum of 20% equity in your property (when refinancing) or 20% down payment (when buying), and a property that’s located in a marketable neighbourhood.
Besides the high required down payment and a few restrictions on the property location, it is easier to qualify for a mortgage with bad credit. Bad credit mortgage lenders use a common-sense approach to review applications for approval, given that most of their clients do not fit the traditional income and credit bracket.
Alternative mortgage lenders employ high debt-service ratios and high amortization periods of up to 30 days. The high debt service ratios and longer amortization make it easier to qualify for these mortgages, even with a low income.
Is Alternative Mortgage The Right Option For You?
An alternative mortgage is ideal if the income you claimed in your tax filing is not enough to qualify for a mortgage with a bank, or you’ve had a few personal circumstances in the past that have negatively affected your credit record. In general, you should be a candidate for an alternative mortgage loan if your income and credit profiles fit the standard of traditional mortgage lenders.
It will be surprising to know that it is easier to qualify for an alternative mortgage loan. Alternative mortgage lenders offer flexible criteria given that the clients they target do fit the standard qualification guidelines.
Other than the high required down payment and the possible high mortgage rate, it is easier to qualify for alternative mortgage loans than a prime (insured and insured) mortgage loan.
Alternative mortgage lenders employ common sense in their mortgage review.
Alternative mortgages are mortgage loans that do not fit traditional lenders’ approval guidelines or default insurance qualification criteria.
Mortgage solutions that fit the alternative mortgage bracket are bad credit mortgage, private mortgage, business for a self mortgage, and second mortgage loan products.
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Now you know that your 500 credit score can get you a mortgage loan, but how do you apply for one?
First, you need to hire a competent mortgage broker or mortgage agent. Unlike prime mortgage solutions, where you can walk to a bank and apply, alternative mortgage lenders, distribute their mortgage products exclusively through the mortgage broker network.
Start by submitting your mortgage request by answering the few questions on this page. That’s all.
Once your submission is received, a mortgage consultation will reach out to you to discuss your mortgage needs in detail.
After discussing it with you, the mortgage consultant will work, search, and negotiate with different mortgage lenders to find the right mortgage solution that satisfies your needs.
The Mortgage Consultant handles all the legwork with the lender on your behalf while keeping you in the loop through every step.
What Should I Know Before Applying
Down Payment: You need a minimum of 20% of the house value to qualify for a mortgage.
Lender Fee: lenders charge underwriting and administrative fee. This fee ranges from 1% to 3% of the mortgage loan.
Lenders For Alternative Mortgages
Alternative mortgage lenders are called solution-based lenders because of their flexible qualification criteria. You can still get a competitive rate mortgage with an alternative lender with a 500 credit score.
Alternative mortgages are short-term solutions meant to help you re-establish your credit and income situation. You can get a low down payment and cheap mortgage with good credit and income from prime mortgage lenders.
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