Need to buy a new home but got a bad credit rating? Read our guide about choosing a Bad Credit Mortgage Lender
Find a bad credit mortgage lender - you'll be forever in our debt!
A bad credit mortgage lender (also called a sub prime mortgage lender) offers people with a low credit score finance with which they can buy their new home. Without that assistance it is unlikely that a ordinary lender would wish to finance the purchase.
We tend to have a low opinion of bad credit until the day comes when we see how easy it is to fall into the various traps. Even the simplest of things can trigger the event which will leave you proud possessor of a low credit rating. Once the slide has started, it is almost impossible to extract yourself; every payment takes a long time to set up and is so difficult to organize.
Nowadays the facility to repair a bad credit rating exists but this is no overnight job and it takes a long time to re-establish a proven payment history and, in doing so, lift your payment score.
If you are lucky enough to be given a chance to restart by a bad credit mortgage lender then this, in itself, will give you that opportunity to rebuild your credit rating. Make sure that you don't miss any installments or fall foul of the repayment agreement. Although you will paradoxically probably be paying a higher rate of interest for your higher risk loan, if you can persevere through the first year or two, you may find that you have improved enough to be offered traditional finance on more preferential terms.
Speak to as many lenders as you can but make sure that you approach a specialist bad credit mortgage lender as he or she will probably accept a lower rate of interest than a bank or building society who just offer this service as an ancillary option or sideline.
Decide what sort of mortgage suits you best. Are you able to go straight in with full payments or do you need a reduced start? What term are you looking for - 10 years, 25 years etc? How much of a deposit (if any) can you put down?
Make sure you have done your homework thoroughly on the price of the property. The last thing you need is to be told that the price you are paying is in excess of the market value!
Have you considered using a broker? Their fees come out of the lender's profit margin so it need not cost you anything. The main advantage of a broker is that they have a vested interest in getting an offer for you - no offer, no payment for their time; simple. They will also 'know' people and, the personal touch may be essential for what are deemed to be high-risk propositions. A good word about your character "Well, would you lend them the money?" may tip the balance.
Make sure you explore all avenues - specialists, brokers, banks, online etc but, before you fill in that application form try to find out if you are in with an outside chance. Too many refusals can count against you so see if you can get some 'in principle' responses before submitting a formal request. Good luck finding your bad credit mortgage lender!
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