Bad Credit Mortgages
If you have previously been declared bankrupt or had county court judgements lodged against you then your credit rating will be low or non existent. Therefore, due to this low rating, only a handful of lenders will allow you to apply for a traditional mortgage. However, having a bad credit rating doesn’t automatically mean that you won’t be approved by a specialist lender for a mortgage. There are many specialised loan companies that have been set to specifically target the financial market to offer “Bad Credit Mortgages”.
A Bad Credit Mortgage is a mortgage that is issued by a lender or a specialised financial company, which is secured against your property. They work in exactly that same way as a traditional mortgage whereby it is a loan that is secured against a form of your property. This provides the lender with less risk when approving this type of loan. A Bad Credit Mortgage is usually used to fund buying a property; however a mortgage can be extended to provide additional funds that can be used to fund a variety of things such as home improvements or debt consolidation.
If you have a low credit rating, it’s often due to having had county court judgements lodged against you where you have failed to pay previous debt or have had some type of payment arrears. Bad credit mortgages are targeted to this specific audience who have a poor credit history as they often have no other method of raising finance. These types of loans form an area of specialised finance. It’s in this market that bad credit doesn’t necessarily equate to being declined for a mortgage and this type of mortgage is targeted to people who have a poor credit rating.
If you are thinking of applying for a Bad Credit Mortgage, it’s often best to research first with a specialised loan company through the internet. It’s mainly here that you will find a vast amount of information from a number of lenders who are willing to lend to people with a poor credit history. If the amount of information available is too much to digest, it might be worth considering talking to an independent financial advisor to discuss in more detail your exact requirements. However, most specialised lender will be able to offer you a more in-depth service as they are experts in this area. It is often in your best interests to compare which lenders can offer you the best mortgage as it could mean that you are able to get a lower interest rate. Whichever lender you choose to apply to for the mortgage, your credit history will always be checked using the lenders individual credit scoring system.
All lenders perform a credit search on applicants and this gives them full information on your financial history. If you are buying a property, the value of the property will also be assessed by the lender. This enables check the value of your home and your eligibility in the amount of mortgage you have applied for; they will then be able to check if the amount of mortgage you have applied for is in accordance with the value of your property.
You can borrow from as little as £1,000.00 to in excess of £100,000.00 depending on your circumstances. The amount you are able to borrow will depend on you current financial situation and the value of your property; the lender will check how much existing debt you have and your monthly expenditure in comparison to your monthly income.
Interest rates on a Bad Credit Mortgage are quoted as an Annual Percentage Rate (“APR”). The lender will set an APR depending on the amount of mortgage you have applied for and how long the repayment period has been set for. Repayment terms can be from 5 years to 25 years and in some cases 30 years. For these types of mortgages, you should expect to pay higher interest rates than traditional mortgages due to the risk associated with this type of lending.
Apply now for a bad credit mortgage with our parent site Loans UK, or view our
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