You may have already heard of bad credit mortgages but are not quite sure what they really mean. Well, the first thing you need to know is that a bad credit mortgage is not as bad as it sounds, actually. It’s simply the layman’s term for an adverse credit mortgage or a sub-prime mortgage, and it has helped numerous individuals get the property they want – even if they have a low credit rating or if they’ve had problems with their credit record in the past.
The most important facts about bad credit mortgages are that they can be taken advantage of by people who have received a low credit rating due to missed loan or credit card payments, or people who have been declared bankrupt. Individuals who have received a judgment from County Court can apply for bad credit mortgages as well.
Another fact about bad credit mortgages is that their interest rates are usually higher than standard mortgages, and the required deposit you put down for the property may be higher as well – often 15% or more of the property’s value.
Applying for a bad credit mortgage
Bad credit mortgages work much in the same way as standard mortgages, as there are also different mortgage deals offered. These include variable and fixed mortgage deals, and you can also get a better deal if you can pay more than 15% of the deposit. If you can come up with 30% or more of the property’s deposit, then you may have a better rate and chance of getting approval.
Before applying for a bad credit mortgage, however, you need to take a look at your credit rating. Many organisations provide such a service for a small fee. It’s important, after all, to know what you are dealing with – and if there are any mistakes or errors in your credit rating, you can get these fixed before you apply for the mortgage.
Just because you are applying for a bad credit mortgage, it doesn’t mean that you don’t have any good options. Just like standard mortgages, there are some good deals to be had, so make it a point to look around and make mortgage deal comparisons. When comparing mortgage deals, make sure to consider all the charges and fees as well.lo/.
When you apply for a bad credit mortgage, you would have to show evidence of income as well as evidence of regular expenses, just like with standard mortgages. The amount you can get in the end will depend on your income (not just your salary, but also any pension or benefits you may be receiving) as well as your outgoing expenses, prospects for the future, and so on.