Mortgage lenders will definitely assess your financial situation inside and out if you apply for a mortgage. This is normal; after all, lenders would like to mitigate their risks as much as possible when taking on a mortgage applicant. A lender would need to make sure you can really afford to pay your mortgage, and one way they assess your credibility is by taking a look at your credit rating. If your credit rating is poor, you may be understandably worried. But don’t lose heart just yet – there are still ways for you to get that mortgage. Here’s how you can effectively acquire a mortgage even with bad credit.
The basics of bad credit
Essentially speaking, your credit rating or record contains your very own financial data and history which lenders will assess if you are an applicant for a mortgage, credit card, or loan. If you have a record of too much borrowing or debt, missed payments, or issues such as CCJs and bankruptcy, this will be gauged as proof of bad or poor credit.
Your choice of mortgages
But as already stated, you can still get a mortgage even if you have a poor credit rating. There are certain kinds of mortgages which are specifically designed for those with poor credit, such as a bad credit mortgage or sub-prime mortgage. But the thing is that you don’t have much choice when it comes to the type of mortgage you can apply for, and the mortgage you get will most likely be more expensive than a standard mortgage. Also, you may be required to come up with a larger deposit, which can be about 15% and upwards.
Aside from checking your record of credit, lenders will also assess your income, overall financial situation, and your outgoing expenses.
Getting a mortgage
You should still be able to compare different deals when it comes to getting a mortgage, even with bad credit. One good way to compare deals is to speak with a mortgage advisor such as a specialist from mortgage-wise.co.uk since they can present you with a number of choices – and often, some mortgage deals can only be had through such advisors.
What to expect from a mortgage with bad credit
As you already know, the mortgage you may be able to acquire with bad credit will usually have a higher rate of interest or APR. But aside from this, the mortgage may also come with higher or more expensive fees, and the broker who helps you acquire the mortgage will have their own fees as well.
But at the end of the day, if you really want your own home and you have poor credit, as long as you know what to expect and what you should do, it could really be a worthwhile decision.