Real Estate Resources
How Easy Is It To Get a Home Loan With A History of Bad Credit?
There are many people who experience credit difficulties some time in their life. In fact, just last year,
mortgages for people with poor credit records represented over 14% of all UK mortgages.
This percentage continues to grow each year.
There are many reasons for getting a less than favorable credit record. Commonly, the person is simply the victim of bad luck. Typical circumstances might be Poor Health, Bereavement, Redundancy, Divorce or Bankruptcy. Any one of these life changing events would cause a person to
get behind with their mortgage.
Some indicators that you're likely to have a negative credit rating are: You have entered into debt agreement. You have one or more court judgements filed against you. You've filed for bankruptcy. You have been in arrears with a previous loan.
Before now, having a negative credit score could greatly limit
your chance of getting a home loan. It was likely that you would need to talk to an expert mortgage lender with a much higher interest rate than normal borrowers.
Mortgage Lenders in the UK are becoming more and more sympathetic to potential homeowners with
bad credit histories. They are more interested than they used to be in helping
those who are typically good borrowers but had just a little bad luck. Numerous general lenders will now provide home mortgages even with a poor credit rating.
Within the last few years, the range of "credit repair" and "adverse
credit history" UK mortgage agreements from mainstream banks and building societies
has substantially grown. The added competition simply means that mortgage deals being offered to borrowers with less than perfect credit have improved. There are more welcoming terms and lower rates. One of the greatest advantages of borrowing from these mainstream lenders is that they typically offer
you the chance to eventually swith to one of their regular best buy mortgage deals within the next two or three years - if you've been up to date with your payments.
In fact, those with only slightly bad credit scores will usually find that the interest rates they have been offered are no more than 1% over the lender's normal
variable interest rate. Sometimes they're eligible for the same mortgage deals
being offered to mainstream borrowers.
For those with very bad credit, what tends to happen is, depending on how bad the credit score is, the higher the interest rate becomes. At the high end of the scale,
new bankruptcies and other major credit issues could
pay rates as high as 11%. But these rates don't apply to most, so don't
let this discourage you.
If you have found yourself with a poor credit record, you can turn things around by making steady payments on any financial purchase. Mortgage
lenders simply want to see regular unbroken payments. The amount you pay won't matter.
It's the dependability they are looking at. Along with the proper salary, this
will really help to better your credit rating. These two things are the prime ways that people that have excellent credit scores got those scores.
Mainstream borrowers can now expect a wide variety of choices in Home loans: fixed mortgages, variable rate mortgages, trackers –
the list doesn't end there. The really good news is that most home mortgages are now made available with bad credit mortgages too. The majority of lenders who deal with the poor credit
situations are now providing similar choices to those available in teh mainstream market. Fixed rate mortgages over two or three years are becoming progressively popular since they provide a level of security. Even if interest rates get higher,
payments on a fixed mortgage stay the same each month.
To locate the best deal on a mortgage, it's worth it to get some advice from an expert when
trying to find a remortgage or credit mortgage. You should consider speaking to a
bad credit mortgage specialist, who will be able to look at a bigger variety of mortgages for you. Shop around to get the deal that suits you best. So long as your finances are under control today and you have met all the legal commitments
on your debts, you have a better chance to get a home loan or remortgage.
Author's Biography:
Brian Harbinson regularly contributes to MortgageSorter, a UK site specialising in making UK mortgages easy to understand
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