People sometimes trap themselves in the realm of what they think they can’t do rather than seeing the full range of possibilities out there. This fact holds special truth in the realm of mortgages, where bad credit can make purchasing a home or business virtually impossible. However, there are solutions that allow you to get a mortgage even with a poor credit history. Here are some tips to help you get a commercial mortgage in Canada even if you don’t have the best credit score.
How a Commercial Mortgage Works
When you apply for a commercial mortgage, you put up a source of income (such as a business) or a property (such as a home) as collateral to protect the lender should you be unable to make payments. Even if you have collateral, though, many lenders require that you have a good credit history as well. If you have a lot of debt or several unpaid credit installments, the bank could see you as a bad risk and decline you. In the case of a commercial mortgage, this can be devastating, as it can prevent you from getting the property you need in order to make your business a success. Luckily, some private lenders provide more mortgage solutions to help people get the credit they need for your commercial endeavours.
Utilizing B Lenders
One solution that people go for when they need a mortgage but have poor credit is to go through a B lender. This kind of lender works with people who have bad credit and helps to connect them with mortgage options that fit them. These mortgages don’t always have the same interest rate as a normal mortgage and may have extra terms to protect the B lender, but they still serve the same purpose of giving you the money you need in order to purchase your commercial property. In most cases, a B lender offers a fixed interest rate just like normal but seeks a shorter term than an average mortgage. If you have had a run of bad luck and think you can pay off your debt quickly once you get going again, seeking a B lender might be the best option for you.
If you have most of the funds you need or have assurance that you can repay a large debt quickly, you may find that private mortgages offer another solution. A private mortgage is a short-term, interest-only line of credit that you can pay off in a matter of months or a few years. They have fewer credit requirements than a normal mortgage and often come through different lenders than the major institutions that offer mortgages. Failure to repay a private mortgage on time can severely increase your debt, but if you remain stringent about making your payments this could become a good investment for you.
Rebuilding Your Credit
When you have bad credit, due to missed payments, high revolving account balances, or some other factor, you should do your best to rebuild that as soon as possible. Using a B lender can help you with the rebuilding process. Any mortgage you take out through that lender represents a debt that, when paid, increases your credit standing. The more you focus on making your payments while avoiding adding unsecured debt to your record, the better. A credit card or unsecured loan will have a major negative impact on your credit score if you accrue too high a balance, but a mortgage represents a more secure line of credit that can improve your standing as a borrower.
Bad credit is a hurdle in life, but you can overcome it if you try. You can secure a commercial mortgage even with bad credit, although you may need to seek out lenders that you might not normally be aware of. Through B lenders and private mortgages, you can get the mortgage you need and improve your credit at the same time.