Getting a Mortgage When Your Credit is Bad

You have just seen the home of your dreams but your credit is not very good. You know it is likely that you will be turned down by most mortgage lenders. This is the situation facing a great many people, particularly in the credit crunch as banks and building societies cut their lending even further.  However, it is not impossible to get a mortgage, even when you credit rating is really bad. 



A few banks and building societies may be willing to consider you for what is known as a “sub-prime” mortgages or loans,  however you are much more likely to be accepted by a company who specialise in providing home loans for people with less than perfect credit.  These companies are far more willing than the banks to accept you whatever your circumstances. As you are considered to be a higher risk borrower, then it is likely that you will have to find a deposit and the interest rates will reflect the higher risk that the lender is taking. The higher the risk the lender feels you are, based on credit scores and other factors the higher the interest charges will be.  The key to being accepted is to minimize your risk to the lender as much as possible.

Bad Credit Mortgages
Sub-prime loans have higher interest rates than those offered by banks and building societies - usually between 1% and 10% higher and you may also be required to put down a deposit of between 5 and 10% of the property value.  However, companies may vary in their interest rates and deposit requirements so it always pays to shop around as much as you can, as the difference in interest alone can add up to many thousands of pounds.

After a couple of years of maintaining your bad credit mortgage, your credit worthiness will have improved significantly (so long as you maintain your other credit correctly!). Therefore you may be able to remortgage with another company at significantly lower rates.

Compare the Mortgage Market

If you have bad credit and desperately need a mortgage or secured loan it can be tempting to accept the first offer you receive. It can save you a lot of money if you shop around and compare various lenders. A mortgage broker service is a good way of getting quotes and illustrations from multiple lenders with no obligation. Our mortgage broker - Loan Machine specialises in finding bad credit mortgages and secured loans for people in difficult circumstances. All quotes and info are free and you are under no obligation to proceed with any application.

Apply Now for a Free Bad Credit Mortgage Quote - Compare the entire UK mortgage market