Don’t think you can’t get a mortgage if you have had financial difficulties in the past. Bad credit mortgages are available. If you go to a mortgage broker who is a specialist in bad credit mortgages, they will be able to help and advise you.
The Types of Bad Credit
You can have bad credit because of one or more of many different circumstances. For example, if you didn’t pay a debt because you were short of money. The person you owed the money to might have taken you to court. The court may have then issued a county court judgment against you.
The county court judgment is then registered in the public record and it is put on your credit file. When you apply for credit, the lender will ask your permission to look at your file. They will then be able to see that you have a CCJ which tells them that you had a debt which you only paid after the judgment – a settled debt. Or which you didn’t pay at all - a default.
Your Credit File
Other information available on your file includes missed or late credit payments and whether you were paying your debts through a debt management scheme (DMS) or an Individual Voluntary Arrangement (IVA). All this information tells a lender whether or not you are a good risk or a bad risk for a loan or a mortgage.
Before you talk to a mortgage broker get your file online and have a look at it and make a note of your credit score. Get your file from the main three credit agencies which are Experian, Callcredit and Equifax.
How a Mortgage Broker Can Help
A mortgage broker can find you a lender who is willing to take the risk and give you a mortgage. You will probably have to produce a larger than average deposit. It could be that you will need to find between 15% and 25% of the purchase price.
The mortgage itself won’t have the lowest interest rate in the market. Because bad credit mortgages are high risk, lenders tend to ask for higher rates of interest. Your mortgage broker will of course do there best to get you the best deal according to your circumstances.
In the FutureIf your finances are back on track and you are paying your credit obligations on time, without missing payments your credit score will be improving. When you have built it back up to a good score you can ask your broker to look for a better deal with a lower interest rate.