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Vacation Home Mortgage

Vacation homes can be a way for your family to get away from their busy lives and get closer to nature or a way to take a break from the usual routine. Since they are considered second properties the requirements for a vacation home mortgage may be stricter. The mortgage rate will also generally be higher than the mortgage for your primary residence. The type of property, whether is a Type A second home or a Type B vacation home, will also determine the eligibility requirements for your vacation home mortgage. Trust the experienced team at Mortgage Squad Agents to find a vacation home mortgage solution that is right for you.

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    A bad credit mortgage offers individuals with suboptimal credit scores a pathway to financing their home purchase. Lenders use credit scores, ranging in Canada from 300 to 900, to gauge the risk associated with offering you their services—the higher your score, the better your credit standing. Your credit score and history develop through consistent, reliable repayment of debts, including student and car loans and credit card bills.

    You may qualify for a poor credit mortgage even with a score lower than the preferred threshold. Such a score often reflects past financial struggles, like bankruptcy or loan repayment challenges. We are an experienced bad credit mortgage broker, specializing in assisting individuals with bad credit to secure mortgages, offering hope and solutions to those who might otherwise struggle to obtain home financing.

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    Prime Lenders: Prime lenders maintain the most stringent criteria for bad credit mortgages, yet often provide the most favorable rates. These lenders include the traditional financial institutions that typically come to mind for a mortgage application, including major banks. Although they generally favor applicants with high credit scores, it’s possible to secure a bad credit mortgage through them with a credit score of at least 600.

    Trust Companies and Bad Credit Lenders: Specialized financial institutions, such as trust companies, focus on serving individuals with poor credit scores or histories by offering bad credit mortgages. Generally, these lenders cater to clients with credit scores of 700 or below, and they can potentially secure a mortgage for those with scores as low as 550. 

    Private Lenders: These lenders may be either individual entities or private mortgage companies ready to offer mortgages to individuals with poor credit scores or histories. Certain private lenders may restrict their loans to financing only the down payment on a mortgage. Although their interest rates are significantly higher than those of prime lenders or trust companies, private bad credit mortgage lenders are a viable alternative for individuals whose credit scores fall below 600.

    Mortgage Squad Inc. is a beacon of hope for individuals battling bad credit. By facilitating access to diverse lending sources, from prime lenders to private entities, we help our clients significantly enhance their chances of securing a mortgage. Understanding that each client’s situation is unique, we personalize our approach, ensuring that each individual is matched with a lending solution that best suits their financial circumstances and home ownership goals, including a second mortgage.

    If you’re considering applying for a mortgage with a poor credit score, there are several important factors to keep in mind. During the application process, lenders will scrutinize various aspects, but they will primarily concentrate on:

    Credit Score and Debt History: A credit score and your debt or credit history provide a quick snapshot of your risk profile for a lender. Your credit score will determine whether you are eligible for a regular mortgage or will have to finance your home purchase with a bad credit mortgage. Credit scores in Canada range from 300 to 900, with a higher score being better. If your score is lower than 700 or you have a history of missed payments, you may have to opt for a bad credit mortgage. 

    Income and Employment History: A lender’s primary concern is whether you will be able to repay the loan reliably over time. As such, they will look at your income and employment history when you apply for a mortgage. If your credit is below ideal and you have a low income or an employment history that is difficult to verify, then you may be required to apply for a bad credit mortgage. 

    Property: Any time you apply for a mortgage, the lender will want to look at the property. They will look at the state of the construction and required maintenance costs of the property, the area it is in, and if they consider it affordable for you. If you are applying for a bad credit mortgage, the bad credit mortgage lender may be stricter with the type of property they are willing to finance.

    Down Payment: In Canada, the minimum down payment on a property is 5%, with that amount rising to 10% of a property that is valued over $500,000.

    At Mortgage Squad, we specialize in helping individuals with less-than-perfect credit secure their dream homes. With over 15 years of experience, we are known as a leading bad credit mortgage broker with an expertise in navigating through the complexities of bad credit mortgages. We understand the anxiety and uncertainty that comes with the fear of mortgage denial. That’s why our approach is focused on preparing our clients for success right from the start. Our comprehensive pre-approval services and robust application support are designed to present your case in the best possible light. Trust us to guide you through every step of securing a mortgage, even when your credit score isn’t ideal. Whether you need a second home mortgage or require assistance with mortgage renewal, we are here for you.

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    Win A Free Mortgage Payment

    Register your mortgage renewal date with Mortgagesquad.ca and you could WIN your first month’s mortgage payment upon renewal (see terms and conditions). When you register your renewal date with us, you are securing the lowest interest rate possible up to four months prior to your mortgage coming due. So, if rates go up prior to your mortgage renewing, you can still get the lower rate. If rates go down, you will still get the lower rate… it is a WIN WIN FOR YOU.

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    Tips for Getting a Credit (HELOC)

    Because the burden to prove eligibility is greater on self-employed individuals, it pays to be well prepared before applying for a loan. The following should be considered before going into apply for a Self-Employed Mortgage:

    Vacation Home Mortgage Qualifications

    As with other properties there are certain rules or requirements that must be met for a vacation home mortgage. Most of the standard requirements for income and employment verification will apply for both Type A and Type B properties. Credit score assessments will also be similar with a score of 600 generally being the lowest accepted amount for Type A properties, although Type B properties will generally have a higher requirement. Bankruptcies, judgements, and recent missed payments may make you ineligible for a vacation home mortgage.

    The down payment requirements for a mortgage are a minimum of 5% for Type A properties and 10% for Type B properties, although Type A properties worth over $500,000 will require 10% for the amount valued above $500,000. Lenders may prohibit the use of non-repayable gifts from family members for the down payment of a vacation home mortgage.

    Is it harder to get a mortgage if I am self employed?

    Obtaining a Self-Employed Mortgage can be more difficult than a traditional mortgage as the borrower has to take extra steps to prove to the lender that they are capable of maintaining regular payments on their mortgage. It is possible that depending on the financial institution, that Self-Employed Mortgages are not offered at all. Where they are offered, there is also the chance that banks will significantly increase the interest rates for these loans, making them a more difficult consideration for borrowers. To give a better chance at being approved, lenders are expected to offer a large down payment, up to 20% or higher, as well. Another difficulty associated with Self-Employed Mortgages is the lack of a T4. A full time Employee can provide proof of income through a simple T4, however a self-employed individual must provide a stated income form, which shows the amount the potential borrower claimed to have earned, and then must provide documentation which can prove the stated amount is accurate.

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    Commonly Asked Questions

    For a property classified as a second home (Type A) the minimum down payment for a vacation home mortgage is 5%, although a property value greater than $500,000 will require a down payment of 10% for the value above $500,000. For a property classified as a vacation home (Type B) the minimum down payment is 10%.
     
    For a property classified as a second home (Type A) the minimum credit score required for a vacation home mortgage is usually 600. For a property classified as a vacation home (Type B) the minimum credit score is usually in the high 600s. The better your credit score the better the mortgage rate will be for your vacation home mortgage.
    Since vacation homes, both Type A and Type B, are considered second properties the risk is considered higher. The mortgage rates for a vacation home mortgage are typically higher than the rate for a primary residence. The larger the down payment and the better the credit score the more favourable the mortgage rate is likely to be.

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