An asset based loan can involve most any type of asset that provides security to a lender so that in the event of loan default, the lender has a means of getting their money back.
The most common form of asset based bad credit loan is a private mortgage from a private lender where the asset being pledged as security is the equity in a residential property.
Most any other forms of financing are going to be based partially or completely on the strength of your personal credit profile and credit score. So if you have the ability to secure a home equity loan through a private lender, this is likely going to be your best and lowest cost option.
A bad credit mortgage is really no different than any other type of mortgage, other than its provided by a private lender or private lending groups instead of from a bank or institutional lender.
In most situations where a private mortgage is acquired due to bad credit, there already is a residential home mortgage in place in a first position and the private mortgage becomes second mortgage financing.
When we speak of bad credit, we are basically saying that your credit is at such a level that there are no bank or institutional options available whatsoever, which is why a bad credit loan secured by real estate is very common.
A private mortgage lender who is prepared to consider an application for a Toronto bad credit loan will be primarily focused on the value of the real estate and have a secondary focus on the income or potential income the applicant can generate to make monthly interest payments on the mortgage.
Most bad credit mortgages provide an interest term of one year and if the mortgage is to be extended further, there is likely going to be a renewal fee required.
So in effect, a bad credit mortgage is short term bridge loan that basically buys you time to get your credit situation in order and/or provide time for funds to be acquired from other sources to pay down the outstanding debt.
The process to locate and secure a Toronto bad credit loan secured by real estate is to work with an experienced mortgage broker that has access to private mortgage lenders in your area.