How Easy Is It To Get a UK Mortgage If You Have a Bad Credit History?
Is it Difficult to Get a UK Home Loan With A Bad Credit Rating?
There are many who will face difficulty with their credit some time in their life. Actually, last year alone, mortgages for people with a bad credit rating represented more than 14% of all UK mortgages. This proportion is growing year after year.
There are different reasons for recieving a less than favorable credit record. Too often, people are clearly the victims of bad luck. Common circumstances include Poor Health, Bereavement, Redundancy, Divorce and Bankruptcy. Any of these life changing events can cause homeowners to fall behind with their mortgage.
Main indicators that you have a negative credit history are: You've declared bankruptcy. You have a court judgement against you. You have entered into debt agreement. You've been deficient with a past mortgage or other bank loan.
Until recently, having poor credit could restrict your liklihood for getting a home loan. Most likely you would have to speak with a mortgage lender expert and pay a higher interest rate than other borrowers.
Now, UK Mortgage Lenders are becoming increasingly sympathetic to potential homeowners with poor credit history. They're much more interested than they used to be in seeking out those that are usually good borrowers but just had a little bad luck. Numerous standard lenders now provide home loans for people with a bad credit record.
In the past several years, the range of mortgage agreements from banks and building societies has remarkably grown. This increased competition indicates that deals they offer to borrowers with poor credit have improved. There's lower rates and terms that are more favourable. The advantages when doing business with these mainstream lenders (typically building societies) is that they often offer you the opportunity to eventually change to one of their regular best UK mortgages about three years later - assuming you have been up to date with your payments.
In fact, people with only slightly adverse credit ratings will often discover that the interest rates they are offered are less than 1% higher than the usual variable interest rate. Sometimes they will find that they're even eligible for the exact same mortgage deals that are offered to more mainstream borrowers.
For people who've got really poor credit, what tends to happen is, depending on how bad the credit record is, the higher the interest rate gets. At the top end of the scale, new bankrupts and others with more serious credit issues might see interest rates up to 11%. But these won't pertain to most people, so don't let this discourage you.
If you have a truly bad credit rating, one thing that will help is by making reliable payments on any financial responsibilty you have. The mortgage lenders simply want to see unbroken payments. The amount you pay doesn't matter. It's the dependability that really matters. Along with a regular means, this can really help improve your credit record. Those two things are the main ways that those with positive credit ratings got those ratings.
Mainstream borrowers can now expect many choices of UK homeloans: trackers, variable mortgages, fixed rate mortgages the list goes on. The good thing is that most home mortgages are currently available with bad credit mortgages as well. A lot of lenders dealing with the poor credit cases now provide similar choices to those offered to mainstream borrowers. Two year fixed rate mortgages are becoming more popular for the security they provide. Even if interest rates get higher, payments on a fixed rate mortgage remain the same each month.
To get the best deal on a mortgage, it pays off to have some advice from a professional when considering a credit mortgage or remortgage. First consider talking with a bad credit mortgage specialist, who is able to study a wide assortment of mortgages for you. Shop around to get a package that will suit you best. So long as you have your finances under control now and you've payed all legal responsiblities on your previous debts, you have a likely chance of getting a mortgage loan or remortgage.
Brian Harbinson regularly contributes to MortgageSorter.co.uk, a UK site that specialises in bad credit mortgages.
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