Mortgages for Bad Credit: What You Need to Know

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If you have a bad credit rating, getting a mortgage may seem like a daunting task. But fear not, there are mortgages available for people with poor credit histories or adverse credit mortgages. In this article, we’ll explore everything you need to know about getting a mortgage with bad credit, including how credit histories with Koodoo and rebuilding your credit score can help, how bad credit mortgages work, and what you need to know about credit mortgages or sub-prime mortgages.

bad credit mortgages adverse

What is a Bad Credit Mortgage?

A bad credit mortgage is a specific type of mortgage primarily designed for people with bad credit or a poor credit history. Because bad credit mortgages present a higher risk to lenders, they generally come with higher interest rates and fees than traditional mortgages. Although most lenders will consider people with a bad credit history, the interest rates and fees are usually higher than normal. However, by rebuilding your credit score over time, you can improve your chances of qualifying for a more favourable mortgage deal. If you have adverse credit or past credit problems, you may have some questions regarding bad credit mortgages, and it’s always a good idea to refer to the Bad Credit Mortgages FAQs or consult with a financial advisor for more information. Additionally, it’s essential to review your credit file to identify areas that need improvement.

How Does a Bad Credit Mortgage Work?

A bad credit mortgage works in the same way as a traditional mortgage. You will need to apply for a mortgage and go through the affordability and eligibility criteria. If approved, you will be able to purchase a property and make monthly payments towards the mortgage. However, if you have bad credit, you may be required to pay higher interest rates and fees.

missed payments

Getting a Mortgage with Bad Credit

To get a mortgage with bad credit, you will need to take steps to improve your credit score. This includes paying your bills on time, reducing your debt, and improving your credit history. You should also look at your credit report to see if there are any errors or incorrect information that could be impacting your score.

Compare Mortgages for People with Bad Credit

When applying for a mortgage, it’s important to compare mortgages for people with bad credit. Most lenders specialise in offering mortgages to people with bad credit histories, so it’s worth shopping around to find the best deal. You can use a mortgage calculator to compare different mortgages and work out how much you can afford to borrow.

Applying for a Mortgage with Bad Credit

When applying for a mortgage with bad credit, you will need to provide information about your credit history and budgeting sensibly. You may also need to provide evidence of regular payments such as utility bills. If you have a county court judgement (CCJ) in the last six years, you may find it more difficult to get a mortgage, and you may need to consider a bad credit mortgage or sub-prime mortgage.

Remortgaging with Bad Credit

If you already have a mortgage and have experienced bad credit, you may be able to remortgage with bad credit. This involves applying for a new mortgage with a different lender to pay off your existing mortgage. Remortgaging with bad credit may be challenging, but it’s worth considering if you want to reduce your monthly payments or release equity in your property.

How to Apply for a Mortgage with Bad Credit

To apply for a mortgage with bad credit, you should follow these steps:

  1. Check your credit report
  2. Find a lender that offers bad credit mortgages
  3. Compare different mortgages and work out how much you can afford to borrow
  4. Provide evidence of regular payments such as utility bills
  5. Make sure you can afford the monthly repayments
  6. Consider getting advice from a mortgage broker or financial advisor.

Conclusion

Getting a mortgage with bad credit is challenging, but it’s not impossible. By taking steps to improve your credit score and shopping around for the best deal, you can get a mortgage and achieve your dream of homeownership. If you’re struggling with debt, you can find confidential debt advice from the government-backed Money Advice Service or StepChange Debt Charity.

Additional resources for further information:

https://www.ukfinance.org.uk/

https://www.themortgageworks.co.uk/

https://www.precisemortgages.co.uk/