A bad credit loan mortgage is an agreement between a mortgage lender and a consumer, where the consumer has a bad credit history. As is the situation with standard mortgages, you would agree to borrow a fixed amount of money over an agreed time period, and the lender would set an interest rate on the loan, so that interest would be paid each month along with the loan repayments. However, what differentiates a bad credit loan mortgage from the standard home, loan agreements, is that your bad credit history would mean that stricter lending terms would be imposed on the mortgage. For example, you would usually find that the interest rate on a bad credit loan mortgage would be considerably higher, and that you would be eligible for fewer products on the market.
Lending criteria has tightened in recent years due to irresponsible lending and the subsequent collapse of the property market. People who missed mortgage payments and had a large amount of debt were once seen as attractive propositions by lenders because they could charge higher interest rates and impose severe penalties on mortgage defaults. However, now bad credit loan mortgages are viewed with suspicion by most of the high-street lenders and you will often have to apply for your home loan at a bad credit loan mortgage specialist. The benefit of the recent lending restrictions is that you are less likely to be offered a bad credit loan mortgage if you have not got the means to pay it back, and there has been an overall improvement in the responsibility of UK lending. However, a drawback for consumers with poor credit is that they have less options available now than would have been the case several years ago. If you are struggling to find a bad credit loan mortgage, simply fill out the short form below and we will put you in touch with a qualified mortgage advisor from the SimplyFinance network who can talk you through your options.
Why choose a Bad Credit Loan Mortgage?
- Quite simply, a bad credit loan mortgage is something that you would only choose if you did not have adequate credit for a standard home loan. The reason for this is that the interest rate will be higher for a bad credit loan because the lender has less certainty that you will pay back the money responsibly.
- If you are looking to buy a house, a bad credit loan mortgage is your only option. However, if you have poor credit and you already have a property with no mortgage, you have the option of taking out a secured loan instead. This is known as a 'first charge' loan, whilst a loan on top of a bad credit loan mortgage would be known as a 'second charge' loan. Whilst a secured loan could be an good option because the interest rate may well be lower than a bad credit loan mortgage, you still run the risk of losing your property if you are not able to make the repayments, so think carefully before pursuing this.
Mortgage Payment Calculator
First Time Buyers, Your Time Has Come!
How much is your Mortgage really costing you?