Is getting a mortgage with bad credit always going to cost me a fortune, or are there good deals out there?
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nandoDave
1 year ago
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
it wont always cost a fortune but it clearly wont be the cheapest option. there are some specialist lenders that came to the market in 2010 which will only deal with IFAs rather than having a branch network as they support the work done by IFAs with their advice process and want all borrowers to take advantage of financial advice.
the simple answer is that it need not be outrageously expensive as some rates start at around the 4.5% level but as with most mortgages will still be heavily influenced by the amount of deposit/equity you will have as the bigger stake you have the less risk to the lender.
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the simple answer is that it need not be outrageously expensive as some rates start at around the 4.5% level but as with most mortgages will still be heavily influenced by the amount of deposit/equity you will have as the bigger stake you have the less risk to the lender.
Expert Financial Adviser Answer
Paul Ross DipPFS CII(MP&ER)
answered 1 year ago
It all depends how bad your credit is. The lender will "price" in the risk and normally if your credit is too bad, they won't lend to you at all. It will also depend on what deposit you have - this will undoubtedly reduce the rate
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Expert Financial Adviser Answer
John Stirling
answered 1 year ago
That depends on how you define a 'fortune'. Please remember that at the moment rates are lower than any other period in history - we get all upset when we see pay rates of 6% - but it wasn't that long ago that 6% was a rate that you would have sold a family member to get.
Both the previous answers are correct, but please remember that when rates normalise (and it might be a while yet, but it will happen) your margin will likely remain as it is, but the base rate will increase - that 4.5% pay rate now could easily end up being 9% or more - which could leave you in something of a hole.
Looked at more positively though, a well run mortgage account is one of the best things to have on your credit score to improve it, and hopefully allow you to convert to a 'prime' mortgage in the future.
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Both the previous answers are correct, but please remember that when rates normalise (and it might be a while yet, but it will happen) your margin will likely remain as it is, but the base rate will increase - that 4.5% pay rate now could easily end up being 9% or more - which could leave you in something of a hole.
Looked at more positively though, a well run mortgage account is one of the best things to have on your credit score to improve it, and hopefully allow you to convert to a 'prime' mortgage in the future.
