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Is it Hard to Get a Mortgage in the UK If You Have A Bad Credit Rating?

There are a lot of people who will experience credit problems at some point in their lives. Last year alone, mortgages for people with a bad credit rating represented in excess of 14% of mortgages in the UK. This percentage continues to grow each year.

There are several different reasons that cause people to get a less than favorable credit rating. Commonly, the person is a victim of bad luck. Common circumstances might include Death, Redundancy, Poor Health, Divorce or even Bankruptcy. These situations can cause homeowners to fall behind with their mortgage loan payments.

Main indications that you may have a less than favorable credit rating are: You have one or more court judgments against you. You have entered into debt agreement. You've filed for bankruptcy. You've been behind with a previous mortgage or other loan.

Until lately, having a poor credit score could deeply limit your chances of getting a home loan. Chances were that you would have to speak to a mortgage lender professional and accept a higher interest rate than regular borrowers.

Mortgage Lenders in the UK are becoming increasingly sympathetic to those people with poor credit ratings. They are more interested now finding those that are typically good borrowers but have simply had bad luck. Numerous mainstream lenders will now provide mortgages even with a poor credit history.

Over the past few years, the range of "credit repair" and "adverse credit history" UK mortgage agreements from mainstream banks and building societies has remarkably grown. This added competition simply means that mortgage deals that are being offered to bad credit borrowers are better. There's lower interest rates and terms that are more favourable. One of the greatest benefits of doing business with these mainstream lenders (typically building societies) is that they often offer you the opportunity to switch to one of their best buy mortgage deals after a couple of years - if you have been paying your payments on time.

In fact, those with only lightly adverse credit ratings often discover that the interest rates that were offered to them are no more than 1% over the lender's normal variable interest rate. Sometimes they qualify for the exact same deals being offered to mainstream borrowers.

For people with really bad credit, what seems to happen is, the more severe the credit history, the higher the interest rate charged. At the top end of the scale, new bankruptcies and others with more severe credit matters will probably pay rates up to 11%. These rates won't pertain to most people who borrow, so don't let this discourage you.

If you have a really bad credit record, one thing you can do to change things around is make regular payments on any financial responsibilty you have. Mortgage lenders just want to see regular frequent payments. The amount you pay doesn't matter. It's the regularity they watch for. Combined with a regular income, this will really better your credit record. Those two things are the main ways that those that have positive credit ratings got those ratings.

Mainstream borrowers can now anticipate and expect many different choices of UK mortgages: fixed mortgages, tracker mortgages, variable mortgages – the list doesn't end there. The best news is that most loans are now possible with poor credit rating mortgages as well. The majority of lenders working with the bad credit situations now provide close to the same choices to those offered in the mainstream market. Three year fixed rate mortgages are becoming progressively popular because they offer a level of security. Even if interest rates vary, payments on a fixed rate mortgage remain the same.

To find the best deal on a mortgage, it pays to get expert advice when searching for a remortgage or credit mortgage. Make sure you consider speaking to a bad credit mortgage specialist, who will be able to look over a very wide selection of home mortgages for you. Shop around to discover a package that works for you. So long as you've got your finances controlled currently and you have met with all the legal commitments regarding your debts, you have got a likely chance to get a remortgage or mortgage loan.

About the Author:

Brian Harbinson contributes regularly to MortgageSorter, a UK site specializing in making UK mortgages easy to understand