Bad Credit Mortgages – What You Need to Know
Having bad credit might feel like a complete disaster if you are looking to secure a mortgage with a view to buying a home. Successfully applying for a mortgage with bad credit is possible however, with a few options open to you to consider before giving up on your dream of owning your own home.
With so many people, especially of a younger generation in a bad debt spiral it is important to completely understand your options in terms of mortgages when you have bad credit and debt.
There are a few reasons why someone has bad credit and your history and credit score can take some time to repair itself. You may have missed a credit card, loan or mortgage payment. If you are in a debt repayment arrangement, have a County Court Judgment (CCJ) or have been declared bankrupt your credit score will be bad. A misconception is that someone without a credit history is likely to be accepted to a mortgage. This is a falsehood and those with no history of making payments of any kind in credit will not have built a record up and be deemed to be a safe bet to lend money to. If you have applied and been rejected for loans or mortgages this will also count against you. It is always worth building up your credit score before applying for a large loan or something that will come under greater scrutiny.
Harder to Get a Bad Credit Mortgage in Recent Years
Since the credit crunch nearly a decade ago it has become increasingly difficult for people with a bad credit score to secure a mortgage. Lenders have become more risk averse in recent years and as a result there has been a limit to the number of lenders who are able to provide a mortgage to those with a bad credit history, but it isn’t a non-existent market.
There are specialist bad credit mortgage lenders out there for you, but of course it is difficult to be accepted as they need to ensure you will be able to make the mortgage repayments. In most cases a larger than average deposit will be required as the amount you’ll be able to borrow will be lower than a normal mortgage.
Remortgaging with Bad Credit
If you are looking to remortgage to free up some finance or for a variety of reasons the first place to start is by ensuring that you have always made your current mortgage payments on time. This will help you build up a stronger credit rating before you apply to remortgage with bad credit. It is possible to find the lenders who are willing to negotiate with you for remortgage, even if you have a poor credit score.