How can I improve my chances of being accepted for a bad credit mortgage?
- Improve your credit history
- Register to vote
- Look at past shared financial history
- Check your credit report
- Take your time
- Appeal to lenders
- Gifted money from family for a deposit
- Having a family member become a guarantor
- Speak to a mortgage or financial advisor
Improve your credit history by borrowing credit responsibly and making your repayments on time. This can even be as simple as spending on a credit card and making sure you clear the balance on time, every month. It’s not a quick process but can begin to repair your credit history.
Registering to vote at your current address is an easy win for improving your credit score.
Consider old friend’s and your partner’s financial history when you apply for a mortgage. It’s important to consider who you’ve shared financial payments within the past. This could be an old housemate or partner that you used to share an account with.
Check your credit report with a free credit service to check your credit report. Credit check companies like Experian or Clearscore can give you a general idea of how lenders view your financial identity. They can give you tips on how to rebuild your score too.
Take your time. Depending on the credit problem, some marks on your credit history may disappear over time. This means certain lenders might consider your mortgage application even after you’ve gone through bankruptcy, an Individual Voluntary Arrangement (IVA) or a CCJ. The timescale can vary from lender to lender, so it’s always worth checking with them to get more information.
Appeal to the lender by applying when you’ve got yourself in the best financial position you can be in. A regular, stable income is always a big plus, as is a big deposit. If you do have some credit issues from the past, the lender will be able to see you’ve made recent efforts to fix your financial issues.
Gifted money from family can be used for a deposit. Some lenders will accept a deposit if it’s ‘gifted’ from a member of your family. The lender won’t accept a gifted deposit that’s a loan, so you must be under no obligation to pay the money back.
Having a family member become a guarantor could be a great option if you find yourself unable to get a mortgage. A guarantor is someone, such as a family member or parent, who takes on some of the risk of the mortgage. A guarantor will usually have to offer something to the lender to cover the mortgage payments if you start to miss them. For example, using their home as security against the loan.
Speak to a mortgage or financial advisor if you have concerns about how your bad credit could affect you getting a mortgage. You may have to pay for this service, but they could help you find a good mortgage deal in the future.
The pros and cons of a bad credit mortgage
- If you’ve been rejected by the big high street lenders, that doesn’t mean you can’t find a deal. There are specialist lenders you can apply to and help you get a mortgage. Make sure to shop around as best you can to find the right deal for your financial situation.
- Being able to get on the property ladder is a big plus. If you’ve found the perfect property and the right mortgage deal, successfully making your repayments every month can help improve your credit history.
- In the right situations, such as when the housing market has slowed down, you may stand a better chance of negotiating a better price for a property you’re looking at.
- Deciding to get a bad credit mortgage now means you have less time to build up your credit score. If you decide to wait and work on improving your credit report, you could find yourself being able to shop around for better deals on a wider choice of mortgages.
- It means having less time to save for a deposit. The larger your deposit, the more likely you are to be accepted by a lender, as it shows you can handle your finances.
- A bad credit mortgage will generally mean being charged higher interest rates, which means you’ll pay more back in the long run. If you decide to wait and work on your credit score and financial situation, you may find a better deal with better rates.
You should think carefully before securing debt against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
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