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Bad Credit Mortgage


Understanding What a Subprime Mortgage Means for You

It’s important to be able to access a good deal on a mortgage, whatever your situation. Of course, this can be difficult for people who have poor credit histories. If you have even minor issues with your credit history, or if you have yet to establish a good record of credit, you may encounter difficulties when attempting to get a mortgage. However, you can still potentially do business with specialist subprime lenders.

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

Understanding Your Bad Credit Mortgage Options

These days, it is perfectly possible to secure a subprime mortgage – aka a ‘bad credit mortgage’. These specialist types of 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. As a result, the terms and conditions governing a bad credit mortgage may be stricter than those of a conventional home loan.

What is Considered Bad Credit?

You may be considered to have a poor credit score if you have failed to meet any formal payment obligations in the past. Everyone has their own unique credit score – lenders having their own criteria regarding good credit scores, bad credit scores and so on. Bad credit mortgages are engineered specifically for poor credit applicants, or those that have yet to build any credit at all.

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 place. This is all due to the way the lender will seek to mitigate any potential damages of doing business with an individual with an 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 Loan Options

When dealing with bad credit mortgage providers, it is still important to ensure you get the best deal possible. You could find yourself in a good position if you can get an interest-only loan. This will allow 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 broker at the earliest possible juncture. 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, your budget and your credit history with an experienced broker, in order to find the best possible deal on your next home loan.

Bad Credit Mortgage FAQ

Depending on the level of adverse, you should be able to get a bad credit mortgage. The lender may charge you a higher rate as they see it as them taking a higher risk in lending you the money. It is also dependent on whether you are able to easily explain the cause of the arrears / poor credit. Once again depending on when the arrears occurred or what the amounts are, they can also be ignored.
This will depend on what has caused a poor credit score. You would need to check your credit report and if the poor credit is not due to missed payments or is from a while back it is possible that the lender will ignore it or offer you a slightly higher priced product.
Your credit rating will affect your eligibility for a home loan with the vast majority of major banks and lenders. However, this doesn’t mean you won’t qualify for a specialist bad credit mortgage. It’s simply a case of directing your applications at the right lenders – most of which are not on the High Street.
Applying for a bad credit mortgage can be simplified by working with an independent broker. Due to the nature of a bad credit mortgage, it is important to ensure that you compare as many deals as possible from an extensive panel of specialist subprime lenders.
A lot of specialist lenders will ignore some level of adverse or bad credit. It is best to contact a broker who has a range of these lenders on their panel and will be able to find you a lender based on your level of adverse.
It depends on the lender and the mortgage products you apply for. While a bad credit mortgage can sometimes attach higher borrowing costs than a traditional mortgage, this isn’t always the case. Your broker will help you find and secure the best possible deal for your needs.
Absolutely! Once again, it’s simply a case of directing your applications at the right lenders – rather than the usual High Street banks. If you’re in a strong financial position and can comfortably afford the monthly repayments, you can definitely get a good deal on a bad credit mortgage.

Subprime (Bad Credit) Remortgage FAQ

This will depend on what has caused a poor credit score. You or a broker would need to check your credit report and if the poor credit is not due to missed payments or is from a while back, it is possible that the lender will ignore it or they may be able to offer you a slightly higher priced product.
This will depend on whether the poor or bad credit is due to mortgage arrears or any other adverse/bad credit. If it is due to mortgage arrears and they are in the last 3 months you will need a legitimate, easily explainable reason and there to be no other or minimal history of arrears in the past. If there are missed payments on the mortgage within 6-12 months there are lenders out there who will consider lending. If the bad credit is a result of missed payments on other type of credit again depending on when the arrears happened and how much the arrears amount to, they can be ignored. If one is looking to remortgage as they are at eviction stage, you might be able to access alternative finance options such as bridging loans.
If it is due to mortgage arrears and they are in the last 3 months you will be unable to refinance unless there is a legitimate, easily explainable reason and there is no other history of arrears. If there are missed payments on the mortgage within 6-12 months there are lenders out there who will consider lending. If the bad credit is a result of missed payments on other type of credit again depending on when the arrears happened and how much the arrears amount to, they can be ignored. If one is looking to remortgage as they are at eviction stage, you might be able to access alternative finance options such as bridging loans. It best to contact a mortgage broker who has a range of lender on their panel and will be able to find you a lender based on your level of adverse.

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Last Updated: Aug 20, 2019 @ 10:08 pm
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