“We Provide Bad Credit Construction Mortgages Through Private Mortgage Lenders”

A bad credit construction mortgage is only going to be available through a private lending source as institutional lenders will all have some sort of minimum credit test that won’t get passed in situations where bad credit exists.

The more severe the credit, the higher the cost of financing and the tougher the draw requirements are going to be as lenders move to protect themselves from any type of loss scenario.

If the applicants credit is one of habitual late payments and debt write offs over an extended period of time with no change in the credit management practices in the near term, there may not be any one prepared to finance the project as this would speak to a difficult lending scenario and regardless of how high the rate to return may be for the lender, the opportunity may be viewed as too large a potential headache.

Individuals and businesses can have bad credit for a number of reasons that won’t preclude them from getting a bad credit construction loan either. For private lenders that don’t overly focus on the credit profile, the keys to providing a construction loan approval is going to be the amount of equity invested in the deal, the strength of the building plan as it relates to the property’s market place, and the exit strategy that will repay the construction mortgage at the end of the project. For self build situations, the private lender may want to see the take out mortgage arranged prior to construction to make sure that there will be no issue with the borrower being able to secure a long term mortgage.

As long as construction project makes good fundamental sense, there is likely going to be construction financing options available to the borrower. If a private lender can feel comfortable that the risk of loss is adequately covered off, the bad credit position of the borrower in itself is not likely going to decline the application. And if it becomes difficult to secure preferred rates and terms, the borrower may have to consider putting more cash into the initial construction to reduce the risk to the lender.

If you need a bad credit construction mortgage for a project you’re planning or in the middle of, I suggest that you give me a call so we can quickly go over your financing requirements together and review potential construction financing options.

Click Here To Speak With Construction Mortgage Broker Joe Walsh

The post Bad Credit Construction Mortgages first appeared on Ontario Construction Loans And Mortgage Financing.

“Bad Credit Construction Loans Are Available, Depending on The Nature of Your Project and The Make Up of Your Credit Profile”

One of the benefits of construction financing is that most of it is equity based, so repayment ability or debt servicing assessments are not as important as with other types of longer term mortgages.

So if you have bad credit, but the rest of the project makes sense from an equity, budgeting, builder, project management, and exit strategy perspective, a bad credit construction loan still can be arranged.

Good credit is also most important to banks and other institutional lenders. In the world of construction financing, only about 10% of construction loans come from these sources. The vast majority of construction loans are issued by private mortgage lenders.

But its also not fair to say that all private lenders don’t care about your credit. Some privates will take more of an interest in it than others. For those that do inspect your credit report, the primary thing they’re looking for is if you’re a habitual late payer and/or regularly in collections on your credit accounts. No one likes to lend money to someone who looks like they may be difficult to work with or will not honor their commitment on a timely basis.

For the privates that can see past bad credit where there are lots of lates and collections, but the construction financing deal is otherwise strong, expect the rates and fees to be higher and the lender’s patience to be lower when any issues arise.

Bad credit that has been caused by explainable events, especially ones from the not so recent past, may have no bearing at all on a private lender’s decision to fund the project or not. The key is to thoroughly understand exactly what is being reported on your credit report, not just your credit score. If you can effectively explain any and all negatives, or provide supporting documentation to so items reported in error, then you stand a good chance to be seriously considered for any bad credit construction loans you may apply for.

If you’ve got a credit score under 650 and need a construction loan, give me a call so we can review your requirements and your credit profile and see what private mortgage financing options may be available to you.

Click Here To Speak With Construction Mortgage Broker Joe Walsh

The post Bad Credit Construction Loans first appeared on Ontario Construction Loans And Mortgage Financing.