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
