Bad credit mortgages are available -read on to find out more.
Sadly, an increasing number of people find themselves, often through no fault of their own (e.g. divorce, illness, death of loved ones), missing required payments (defaulting). When this happens, it can cause all sorts of difficulties – but all is not lost! People can end up with County Court Judgements (CCJs) registered against their names, or else they may be forced to institute ‘Individual Voluntary Arrangements’ (IVAs) or even, sometimes, be forced to declare themselves ‘Bankrupt’.
Clearly, all of the above can make getting a mortgage harder – but help and advice really is available so do not lose hope. As a first step, if you find yourself in such a predicament, always consult an impartial mortgage broker or independent financial adviser (IFA) as this is someone who should be able to consider the specifics of your particular circumstances and look across a wide range of companies and products for what best meets your needs.
The adviser will be able to point you towards products and lenders who may specialise in helping people in your circumstances, even when others in the market may not be able to consider you.
When applying for mortgages, all lenders will carry out credit checks and some markers in your credit history will create red flags, some carrying more weight than others. For example, a lot of recent debt will carry more weight than a small amount of debt from say, a few years ago – and different lenders will take different approaches to their underwriting.
However, your broker/adviser can help you through this by, for example, directing you away from high street banks, towards other lenders who may be more flexible – like some Building Societies, or specialist ‘bad’ credit lenders.
Bad Credit History may mean a higher deposit is required.
It is true that having a difficult credit history can mean that interest rates applied to bad credit mortgages can be higher than average – or, that larger than average deposits may be required. For example, it may be that you will need a 25% deposit – and/or you may only qualify for a Loan to Value (LTV) percentage of 75% (or lower). However, many mortgage deals used in ‘Bad Credit Mortgages’ cases are ‘Fixed-rate mortgages’ and this can be really helpful in terms of planning finances and being sure about having only manageable outgoings.
Your independent financial adviser or mortgage broker should be able to help with and advise on, all of the above, but a good thing to do, which you may prefer to commence even before consulting a mortgage broker, is to start looking at how you can improve your credit rating as this will certainly improve your chances of being able to obtain a mortgage. Initially, check your credit score using an online credit checking service and once you have your report, give some thought to how you may be able to improve your score as this will certainly help going forwards.
Go below to find a mortgage broker near you.