It’s no secret that in years gone by, if you had a bad credit score and needed a mortgage, you were laughed away by banks and lenders. Nowadays, however, it is possible to secure a mortgage, even if you have a poor credit history.
#1. What is a Bad Credit Mortgage?
A bad credit mortgage is a mortgage tailored for individuals with a previous poor credit history. It’s much like a standard mortgage but with adapted rates according to personal circumstances and situations. Essentially, a bad credit mortgage helps people get on the property ladder who may’ve been refused before.
#2. What Causes Bad Credit?
There are several reasons why certain people do not meet the criteria when sourcing a mortgage. The most common reasons are as follows:
- No credit history
- History of late or missed payments
- Missed mortgage payments
- County Court Judgements (CCJs)
- Debt management schemes
In the past, even a sniffle of any of the above and you could almost guarantee refusal when applying for a mortgage. Today, lenders have come accustom to individual circumstances and altered criteria accordingly.
#3. How can you improve your Credit Rating?
Pay Off Debts
An obvious solution is to pay off your debts by paying more than the minimum payment each month, demonstrating good behaviour to prospective lenders.
It may sound ironic, and borrowing more money when you already have a poor credit rating may sound silly, but by taking out a prepaid card or loan to repair your credit rating is one option. With low monthly fees, it’s a way of demonstrating that you can successfully repay what you owe and manage your finances sensibly.
If you’ve never had a credit card, it can be advised to take one out, make a few purchases each month and pay off the balance at the end of each month, showcasing responsibly managed finances whilst building a credit history.
#4. How can MortgageKey help with a Bad Credit Mortgage?
Understanding Bad Credit
If you’ve never borrowed any money or owned a credit card, obviously, you won’t have much of a credit history. But this doesn’t mean you’re not eligible. MortgageKey recognise this. The same goes for individuals who have missed a few payments over the years; it’s understandable and shouldn’t exclude you from getting a mortgage. Each situation is unique and should be assessed accordingly and fairly.
Benefits of a Broker
As an independent broker, MortgageKey have access to the whole of the market and are not tied to a specific lender. So, we can search unlimited mortgage deals until we find the best deal for you. Additionally, we know the best places to search for the lenders likely to accept bad credit.
Knowledge & Experience
Over the last 6 years, MortgageKey have developed a reliable network. This means that we know precisely where to turn when it comes to bad credit mortgages. Plus, we have a back-log of happy customers to refer to, when assessing a new customer’s situation. Therefore, we can speed up a process by drawing upon previous experiences.
It’s our job to be on top of the latest legislations and criteria shifts. Rules and regulations are often adjusting, as are the lenders terms and conditions. Luckily, MortgageKey keep their finger on the pulse in an ever-changing market.
#5. Bad Credit Mortgages – What Else Do You Need to Know?
First and foremost, it’s important to understand there are lots of offers out there. Be it fixed rate, variable rate or discounted rates, you can qualify for a mortgage.
Unsurprisingly, you are likely to pay more than the average interest rate because you will be deemed more of a risk to the lender.
The bigger the better. The more money you put down the better the deal on the table will be. You should be looking at a deposit of around at least a 15%, to make the process a smoother one.
Throughout the application process, your financial situation will be scrutinised. So, if you can cut down your outgoings in any way, shape or form – it is recommended. Also, you’ll typically need to be earning more than £15,000 a year to be in with a shot.
Bad Credit Mortgages by MortgageKey
We understand the reality of the modern market and how difficult, and sometimes demoralising, it can be to secure a mortgage. But our friendly, personable service with no obligation or fees are one of the reasons why we attract custom.
Speak to one of our advisors about Bad Credit Mortgages today and start making the steps towards your mortgage.