Mortgages for People with Bad Credit

Getting a mortgage for people with a bad credit history can be a real pain. Here we look at the mortgage information basics specifically aimed at those with bad credit problems.

UK consumer debt has been hitting the headlines so often in the past year that it has been almost impossible not to have noticed. The number of people with credit cards is increasing, as is the sheer volume of people getting themselves more and more into debt. For many people looking for a mortgage with bad credit, the future may look decidedly bleak but as the information in this article outlines, if you have a bad credit problem, then don’t despair because help is at hand when you know where to look and you may just be surprised by the choice of mortgages which are currently available in the market catering specifically for people with bad credit problems.

So, what counts as bad credit?

Bad credit, which can also be referred as adverse credit, can affect anyone living in the UK. Bad credit problems refer to a range of difficulties which people may be experiencing including:

County court judgements
Bankruptcy
Mortgage arrears
Loan defaults
Missed credit card payments

Bad credit can affect anyone and often people find themselves in bad credit situations before they even know that it has crept up on them.

Why is getting a mortgage so hard for people with bad credit?

Unfortunately one of the consequences of having a bad credit history is that lenders are worried about lending money to you, especially when it is for as large an amount as a house purchase. Traditionally many mortgage lenders require evidence that your history shows you to be squeaky clean and totally reliable in re-paying any previous loans. If you have defaulted in paying back money you borrowed, or if you have any county court judgements against you, they will immediately see the risk of lending you money to be high and therefore will at best want to charge an increased interest rate.

It’s only fairly recently that mortgage lenders have started to take a more lenient approach to adverse credit before which a mortgage for people with a poor credit history had seemed to be totally out of the question.

How has this situation changed?

The situation as regards mortgages for people with bad credit has changed over the last 3 years because there was simply no choice. This has occured for a variety of reasons, one of which is the significant rise in the number of people getting themselves into debt. As the social attitude towards debt has changed, more facilities, such as store cards, instant loans and buy now pay later schemes have become available for people to borrow money.

A consequence of this is that an increased number of people have not only got into debt but have also found themselves in way above their heads in terms of their ability to repay their borrowings. This has, in turn, brought about a change in the number of lenders who are prepared to lend money to people with bad credit. There is now a relatively large group of specialist lenders who are willing to provide mortgages for people with bad credit and this level of competition amongst them is pushing the rates and up front costs down, resulting in a much better deal for the borrower. In many cases where the bad credit is seen as a minor blip the rates are almost comparable with the standard residential mortgage rates offered by the high street banks and building societies and in some cases there may not be any penalty at all meaning the case might be classed as a normal mortgage deal.

What to do if you are interested in a mortgage and you have bad credit?

If you are interested in a mortgage for people with bad credit then the best thing to do is speak to a professional mortgage broker, who specialises in providing advice for bad credit mortgages. However, always make sure that the mortgage broker you see is qualified and regulated by the Financial Services Authority (FSA) and that they cover the whole of the market meaning you will maximise your choice of scemes available. FSA regulated mortgage brokers are obliged to provide you with the best possible advice and will find you the best mortgage to suite your individual requirements.

Tags:Mortgages For People With Bad Credit