Bad credit mortgages are for people having a problem getting a loan or a mortgage to a purchase property due to poor credit issues such as a credit record frequented with late payments, inability to pay off debts on time, bankruptcy, court judgments, criminal cases etc.
Bad credit mortgages are also known as sub-prime mortgages, adverse credit mortgages, or non-status mortgages and are intended for people who are not able to qualify for traditional mortgages on the high street.
This type of mortgage is becoming common in todays market and many of the mortgage lenders that UK Mortgage Advice Ltd can recommend, are offering very competitive mortgage products to cater for this competitive and growing market.
With the economy so volatile, in today’s current environment, a bad credit rating is not the burden it once was; since 1 in 4 people in the UK are now estimated to have a bad credit rating, many lenders are having to adjust to accommodate these consumers and bad credit loans are the answer.
Mortgages for people with bad credit, are available for both purchasing and re-mortgaging property. The amount the lender approves for you to borrow will depend on your current financial situation and the value of your property; the lender will also check how much existing debt you have and your monthly expenditure in comparison to your monthly income. Many impaired credit lenders are not willing to advance more than 80% of the property value.
The number of lenders that specialize in bad credit mortgages are very limited, but in saying that, they are usually able to offer better service in processing your mortgage. Your credit score is used to determine whether you are eligible for a bad credit loan. The more adverse your credit is, the higher your interest rate will be, as compensation for the risk they take.
Not everybody can meet the requirements for a regular mortgage from a mainstream lender, most lenders tend to turn away borrowers who’ve experienced problems in the past or are self employed. UK Mortgage Advice Ltd will source a Bad credit mortgage Lender for you even if you’ve had CCJ’s, IVA, Bankruptcy, self employed or had mortgage arrears.
Basic criteria requirements for most bad credit mortgage lenders are usually, that, You are a resident in the UK, over the age of 21 and have an income. There are many different bad credit mortgages available from various sub-prime lenders aimed at helping people with bad credit get a foot on the property ladder.
Interest Rates may vary depending on various circumstances, as, location and severity of the bad credit. Interest rates on bad credit loans are set based on the time between credit problems and mortgage application. Interest rates are normally higher than for regular high street mortgage products, because levels of competition in the adverse mortgage market, rates do not tend to be severe.
UK Mortgage Advice will assess each bad credit mortgage lender/product based on its overall cost and not just the rate of interest that the client will pay in the first few years.
Before we proceed with your application, we would want to be sure that you have a bad credit rating, this information would only be available by obtaining your credit file from a credit reference agency, we can help you in this area.
All that said, Bad credit mortgages can also be a way to boost your credit rating; after a number of years of paying into a bad credit mortgage, if you have paid your mortgage on time, with no late or missed payments, you will have repaired your credit rating. We can then be help you in re-mortgaging to a mainstream Lender to get you a better deal.
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Your home may be repossessed if you do not keep up repayments on your mortgage.