Mortgages for Bad Credit Customers

Mortgages for bad credit are specifically aimed at people who have had their credit rating affected because of factors such as:

  • Becoming bankrupt
  • Having a County Court Judgement (CCJ) registered against you
  • Getting into arrears on your mortgage
  • Having a previous home repossessed
  • Missing credit card payments
  • Not having a bank account
  • Not being on the electoral roll
  • Being self-employed
  • Becoming unemployed

Lenders assess a borrower’s ability to pay a loan based on the borrower’s credit report. If you have a history of missed payments etc, lenders will consider you a risky client and will often refuse your mortgage or loan application. It only takes one missed repayment on your credit card to adversely affect your credit rating. However, life is unpredictable and unexpected events such as illness or divorce can leave you with financial problems for a while. The good news is that mortgages for bad credit don’t punish you if you have had a period in your life when you had trouble managing your finances.

Mortgages for bad credit customers can be quite difficult to come by, particularly since the credit crunch. The problems started with the American subprime mortgage crisis which  has hit the UK British market in a big way. Lenders are now much more cautious about who they will lend to the result being that the number of mortgages for bad credit has dropped by about 75%.

So How Do People Get Mortgages for Bad Credit These Days?

Well you can probably cross most high street lenders off your list so it is unlikely that you are going to be able to find a bad credit mortgage on our own. There are specialist lenders that will be sympathetic to past financial problems and who will be able to provide mortgages for bad credit customers. Once you get a mortgage that you can afford to repay you can quickly start building up your credit score again so that you can eventually switch to a more competitively priced product.

The other thing to bear in mind is that if you start applying for a bad credit mortgage on your own and get turned down these refusals can damage your credit even more. This is certainly one case where it is imperative that you go through a mortgage broker or advisor who can evaluate your financial situation and search through hundreds of deals that are not available to the public so that you end up with the best deal possible.

If your bad credit problems happened three or more years ago and you haven’t had any problems since you may be eligible for a mainstream mortgage that comes with better rates. You can check your credit by contacting credit reference agencies such as Experian. It typically cost a few pounds but you can get your credit report for free by signing up for a 30-day free trial at www.experian.co.uk.

Disadvantages of Bad Credit Mortgages

Mortgages for bad credit customers usually have higher rates and will require a bigger deposit – probably around 25%. Different lenders approve different levels of adverse credit, so speak to a mortgage expert who can advise you of the best lender to suit your needs. Fill in our one minute mortgage form and a specialist bad credit mortgage adviser will contact you.