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How Easy Is It To Get a UK Mortgage If You Have a Bad Credit History?
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How Easy Is It To Get a UK Mortgage If You Have a Bad Credit History?
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By:
Brian Harbinson |
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There are a lot of people who experience credit problems at one time or another in their life. In fact, last year, mortgages for people with a bad credit history accounted for more than 14% of UK home loans. This portion is growing each year.
There are many different reasons for getting a poor credit history. Frequently, the person is clearly the victim of bad luck. Typical circumstances might include Death, Divorce, Sickness, Redundancy or Bankruptcy. These factors would cause homeowners to default on their mortgage.
Main indications that you are likely to have a bad credit rating are: You have one or more court judgements filed against you. You have entered into debt agreement. You have been declared bankrupt. You have been deficient with a previous mortgage or other bank loan.
Until lately, having a poor credit score could reduce your potential for finding a mortgage. The chances were that you'd need to speak to a mortgage lender expert take an interest rate that is much higher than typical borrowers.
Now, UK Mortgage Lenders are more understanding to those with less than perfect credit ratings. They have more interest in making a point to help those that are generally trustworthy borrowers but just had some bad luck. Most general lenders now offer home mortgage loans for those with poor credit.
Within the past few years, the range of UK mortgage agreements from building societies and mainstream banks has substantially grown. This increasing competition means that the deals offered to borrowers with less than perfect credit have improved. You'll find lower interest rates and more welcoming terms. One of the biggest benefits of borrowing from these types of lenders (typically building societies) is that they often offer you the opportunity to move onto one of their regular best rates after only two or three years - assuming you've kept up to date with your payments.
In fact, people with only slightly bad credit ratings will usually realize that the interest rates that were offered to them are less than 1% over the lender's usual variable interest rate. Sometimes they find that they qualify for similar uk mortgage deals being offered to mainstream borrowers.
For people who have extremely poor credit, what will generally happen is, depending on how bad the credit history is, the higher the interest rate becomes. At the top end of the scale, newly discharged bankrupts and more serious credit matters will see rates up to 11%. These rates usually won't apply to the majority of borrowers, so don't get discouraged.
If you have ended up with a really bad credit score, one of the best things is to make responsible payments on any financial loan. Mortgage lenders just want to see regular consistent payments. It's not the amount paid that matters. It's the reliability that matters. Along with a regular means, this will really better your credit score. Those two things are the main ways that those that have excellent credit ratings got those ratings.
Mainstream borrowers can now expect a wide variety of choices in UK mortgages: trackers, fixed rate mortgages, variable mortgages the list doesn't stop there. The good thing is that almost all of these are currently possible with bad credit rating mortgages as well. The majority of lenders who work with poor credit situations are now providing close to the same choices to those in the mainstream mortgage market. Two to three year fixed mortgages are becoming progressively popular because they provide a level of security. Even if interest rates do go up, payments on a fixed rate mortgage stay the same each month.
To get the best deal on a mortgage, it's worth it to accept some advice from an expert when trying to find a mortgage or remortgage. Think about talking with a bad credit mortgage specialist, who will be able to study a wide variety of home mortgages for you. Shop around to find the deal that works for you. If you have your finances in good order today and you have met all legal obligations on your debts, you have got a better chance to get a remortgage or mortgage.
Brian Harbinson regularly contributes to MortgageSorter, a UK website that specialises in mortgages for those with bad credit histories.
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