Private Mortgage Solution for Borrowers with Maxed Out Credit Cards

Repeatedly maxed-out credit cards can crash the borrower’s creditworthiness and their eligibility to qualify for low interest rates.

Some borrowers make multiple payments throughout the month to avoid maxing out their credit cards. In order to avoid negatively affecting a high credit score, borrowers should make sure to set a personal alarm when their outstanding balance has reached 75% of the credit limit, as a signal to stop using the credit card until the balance is cleared.

Nearing bankruptcy is considered to be a close call to what could have been a negative record on a borrower’s credit report and would affect the personal credit score for years.

One of the best ways to improve the credit score after nearing bankruptcy is to keep only one credit card with a small credit limit and make sure to pay off the balance in full by the due date. Over time, this responsible habit of borrowing and paying in full will improve the borrower’s credit score.

The process of obtaining financing for borrowers with a history of maxed-out credit cards is much simpler done with a private lender than the process imposed by traditional lenders. Although private lenders will still ask to verify some information to satisfy their internal lending guidelines, in general, it may actually be faster and easier.

Private lenders assess a mortgage loan application based on the property value and its location in the neighbourhood. A property appraisal is certainly a requirement that borrowers will need to satisfy as part of the refinancing process.

Also, generally speaking, private lenders will allow higher loan-to-value (LTV) than traditional banks and lenders.

Private lenders are an ideal option since they are not tied to the same lending guidelines as traditional lenders which is limiting. Unlike bank loans, private lenders focus more on the value of the property and the borrower’s exit strategy to determine the terms of the loan. This means that they will not make any preconditions on the borrower’s credit score or debt to income ratio.

A big advantage of hard money lending is that you can beat traditional lenders’ interest rates and timeframes. While traditional banks are known for their long loan terms, hard money loans can close in just days or weeks. This is important in time-sensitive situations, such as paying off accruing personal debt from maxed-out credit cards. Getting a mortgage loan approved faster helps you resolve your personal situation faster and avoid delays.

Origination fee can also be referred to as “commitment fee”, or any other name. It usually refers to the underwriting or processing fee. This fee can cover a variety of expenses, from processing the loan to underwriting the loan. The amount of this fee depends on the lender and the type of mortgage loan. It is always stipulated in writing so there is no bad surprise to the borrowers on the closing day. If you are not sure how much you are paying for your origination fee, it is a sign that you are not working with an ethical private lender. Be aware and find other private lenders who are transparent with their origination fees.

At Canadian Private Mortgage, we disclose our commitment fee clearly in writing from the beginning of the process.