If you have a bad credit rating and you are looking to get onto the property ladder, you will have found your options limited with mainstream lenders. In the current economic climate, mortgage providers have tightened their lending criteria, and many will not lend above 80 percent of the property value. You will be in with the best chance of securing a ‘bad credit mortgage’ if you have a deposit available (the larger the better, but ideally a minimum of 30 percent of the property value) and if you can show that you are back on track with your finances, although you will usually find that even then, the interest rates will be higher on repayments. You may find that you are only eligible for a bad credit mortgage deal if in the past you have been bankrupt, missed loan or credit card payments or had a CCJ (county court judgement) taken out against you for money owed.
Until fairly recently, there was a much wider range of options available to those with bad credit history, but the market has changed, and the number of lenders specialising in bad credit mortgages has decreased significantly. However, this should not be seen as wholly negative, because the bad credit mortgage lenders that are left in the marketplace will be those with many years of experience and a more conscientious attitude towards lending. At SimplyFinance we would recommend that you speak to an advisor that specialises in bad credit mortgages, and by filling out our short form, you can request a callback from an advisor within the SimplyFinance network.
Bad Credit Mortgage Tips
- Consider and understand the different types of bad credit mortgages. In order to be sure that you're choosing the best bad credit mortgage for you, be sure that you are fully aware of the features of different types of mortgage loans (such as a fixed rate mortgage or a variable rate mortgage).
- Compare lots of rates, and beware of special offers. Due to the competitive nature of the mortgage market, lenders are going out of their way to attract new borrowers with exclusive deals and reduced rates. To ensure that you are not misled by attractive short-term deals, always use the APR as the basis for comparison, rather than the interest rate.
- Bad credit mortgages can help repair your credit. If you keep up with your bad credit mortgage payments, within a few years, your credit will be in better shape than when you first took the mortgage. At this point, you may be able to refinance your mortgage to get a better offer.
- Don't shop around at only big name lenders. High Street lenders may not have the best bad credit mortgage rates, but many of them have affiliate companies that cater to those in need of bad credit mortgages.
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