Property values in the GTA have improved dramatically in recent years and if you own property you might consider taking out a home equity loan. Event individuals who have credit challenges may be able to apply for Toronto bad credit equity loans provided they have enough equity in their property.
Understanding Equity and Loan to Value Ratios
Equity is the current fair market value of your property minus any liens against it. If your property is worth $100,000 and you have a $25,000 mortgage then you would have $75,000 in equity that you could borrow against.
When a lender is assessing a potential loan they look at the credit of the prospective borrower and the value of the property. If the prospective borrower has credit challenges then the lender is going to charge a higher rate of interest and require a lower loan to value ration. This LTV value ratio is usually limited to 80% if an individual has credit challenges, the 20% acts as a buffer in the event the borrower defaults and the property needs to be sold in order to satisfy the loan.
Finding the Right Lender
If you have credit challenges you should get a copy of your credit report and address those issues. While working on the credit challenges it would be in your best interest to start looking for lenders that specialize in this type of financing. There will be multiple lenders to choose from so it would be prudent to get multiple quotes so you can compare them and determine which of these lenders actually has the best terms. Something to bear in mind is these lenders charge interest and may charge brokerage fees so you have to note the “total cost” of the mortgage to identify the lender who is going to give you the best terms.