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Bad Credit Mortgage

Subprime mortgages - property financing for those with a bad credit score

It’s important to be able to access a good deal on a mortgage, whatever your situation. This can be difficult for people who have poor credit history. If you have minor issues with your credit history or yet to establish a good record of credit, you may encounter difficulties when attempting to get a mortgage. You can however, potentially get a mortgage with specialist subprime lenders.

  • CCJ, bankruptcies, IVA, missed payment
  • Terms from 3 to 40 years
  • First time buyers
  • Freehold & leasehold
  • England, Wales, Scotland & Northern Ireland
  • Self-employed with 1 year’s figures accepted
  • Free legal fees
  • Free valuation fees
  • Up to 95% LTV
  • Interest only options available
  • Soft credit searches available

Purchasing a Property with Poor Credit

It is generally assumed that if your credit score is not as strong as it could be, getting a mortgage is out of the question. In reality, this is not necessarily the case.

Irrespective of how damaged (or underdeveloped) your credit record may be, there are options to explore beyond conventional High Street mortgages. The key to success lies in targeting the right lenders with your applications, with the help of an experienced broker.

As it becomes increasingly difficult to maintain a flawless credit history, more specialist lenders than ever before are opening their doors to poor credit applicants. Just as long as you can comfortably afford to take out a mortgage, there is a good chance you will qualify – if you take your application to the right lender.

Bad Credit Mortgage Options

These days it is perfectly possible to secure a subprime mortgage – aka a ‘bad credit mortgage’. These specialist type mortgages enable borrowers with a bad credit history to access the loans they need to purchase homes. When a person has a bad credit history they are considered a ‘higher-risk’ applicant in the eyes of lenders resulting in the terms and conditions governing bad credit mortgages being stricter than those of a conventional home loan.

Bad Credit Mortgages: The Basics

Traditionally, bad credit mortgages have always attached higher rates of interest and elevated overall borrowing costs. This is to augment the assumed ‘higher risk’ of lending to a poor-credit applicant.

This does not necessarily mean that accessing an extremely competitive and affordable deal with poor credit is impossible. Working with a specialist ‘sub-prime’ mortgage provider, your requirements and overall financial position will be taken into account – not just your credit history.

If it is clear you are in a strong financial position and can easily meet your long-term repayment obligations, you may qualify for a deal as competitive as any traditional High Street mortgage.

Though in order to do so, you will almost always be expected to provide a relatively sizeable deposit and offer comprehensive proof of income.

Bad Credit Mortgage Borrowing Costs

Subprime loans typically have higher interest rates and elevated overall borrowing costs. There may be higher fees payable to get the deal up and running in the first instance due to the way the lender will seek to mitigate any potential risk due to the imperfect track record. All of which may sound negative but nonetheless adds up to an open and accessible option for poor credit applicants in need of a mortgage.

Subprime mortgages are riskier for both the buyer and the lender. It’s understandable that certain precautions will be put in place to protect the lender in case things go wrong along the way. Most people who seek bad credit mortgages understand that exceptional deals and market-leading rates are out of the question. The best rates on the market are almost always reserved for borrowers with strong credit scores.

Subprime Mortgage Lenders

When dealing with bad credit mortgage providers it is still important to ensure you get the best deal. You could find yourself in a good position if you can get an interest-only loan allowing you to repay only the interest charged on the loan for several years, without paying the principle loan amount. An interest only mortgage can be a good option for poor-credit applicants who may be unable to qualify for other types of mortgages.

With so many options to explore it’s important to seek the advice of an independent mortgage broker. Bad credit mortgage lenders typically operate away from the UK High street which can make it difficult to track down a good deal without expert support. Discuss your requirements and your credit history with an experienced broker to find the best possible deal on your next home loan.

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Last Updated: Jun 11, 2021 @ 12:05 pm
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