Mortgages for people with bad credit

Like many people in the UK, you might be considered to have a bad credit rating but that shouldn't stop you from getting a mortgage; there are mortgages that are specifically tailored to people with bad credit.

If you've been turned down for a mortgage application, it's probably because the lender concluded that you have a bad credit rating, therefore you're too risky to lend to. In this case, you should turn to lenders who specialise in mortgages for people with bad credit.

Getting a mortgage with bad credit
When applying for a mortgage, the lender makes an enquiry of your credit history from a credit reference agency.

Every credit rating enquiry made will be visible to other lenders, multiple enquiries in a short space of time can make it seem as though other lenders have rejected you.

If you'd rather limit enquiries on your credit rating, it might be a good idea to use a bad credit mortgage broker instead of applying directly to the lender; a mortgage broker will be able to get you quotes from multiple lenders with a single credit enquiry, however most mortgage brokers tend to charge fees which can be anywhere from £500 to a percentage of the mortgage loan.

Choosing a bad credit mortgage
Adverse credit lenders would consider anyone no matter your circumstances; they specialise in helping people who've had CCJ's, defaults, bankruptcy, mortgage arrears, self employed with no proof of income or any other credit problems you may have had in the past.

Although you may have a bad credit rating, it doesn't mean you can't have options; the mortgage lender above should give you a no-obligation quote, if you're not happy with the quotes you get, you can shop around and get back to them later.

Most people will choose the mortgage that appears to have the lowest interest rate, however, you should always have a long-term plan; will your circumstances change, what are the switch-away terms, are there any arrear penalties etc.

Advantages
Although mortgages for people with bad credit usually come with higher interest rates, it is fulfilling to know that at least you are paying into your own home as opposed to renting.

If you maintain payments on the mortgage over a period (e.g. 3 years), your credit rating would have improved, then you would be able to save yourself some money by re-mortgaging with a mainstream lender. Make sure you check the switch-away terms before committing to a quote.

Downsides to bad credit mortgages
In most cases, a mortgage with bad credit requires you to put down a bigger deposit than on a normal mortgage, the interest rates will be higher too. Besides that, there are no major downsides to a bad credit mortgage.

In the past, there might have been various additional fees to a bad credit mortgage, That's because there were very few bad credit mortgage companies.

Today 1 in 4 people in the UK is estimated to have a bad credit rating. As a result, the market for bad credit mortgages has become more competitive which has led to many lenders scrapping additional fees.

Most mortgage brokers will charge for their services. However, some get a commission from the lender, therefore offering their services free to you; make sure you enquire about this before proceeding.


Related to getting a mortgage with bad credit:
Bad credit remortgage - Adverse credit mortgages - IVA mortgage - Bad credit mortgages - Adverse credit remortgage - Credit cards for people with bad credit - loans for people with bad credit - Prepaid credit cards