Even if you have bad credit, you might be surprised to learn that there is a whole industry just for people like you. There are brokers who help people with bad credit get mortgages. They can help you find a good deal.
If you have bad credit, it's likely that you'll have to pay more interest than with other mortgages. This is because you're more of a risk to the lender. Ironically, this is why the "bad credit" sector is doing so well: many people don't meet the strict requirements for most traditional mortgages, and commissions and higher interest rates can make a lot of money.
Careful Steps
Unfortunately, there are a lot of dishonest lenders out there who want to take advantage of people who don't know what they're doing. Some will charge you just to fill out an application, and the deals they offer are probably not great. Word of mouth is a good way to find a reliable lender, or you can check out www.mortgagesorter.co.uk for ideas. www.yourmortgage.co.uk also has information about mortgages for people with bad credit and lists some lenders who will work with people who have been turned down before.
Some of the big banks and building societies have recently looked more closely at the market for people with bad credit and realised they might be missing out on business. Since then, there are about a dozen lenders who offer mortgages for people with "sub-prime," "credit impaired," or "complex prime" credit. "Non-conforming" is another word.
Complex prime deals are more for unusual situations that don't fit the normal requirements for a mortgage. For example, a mainstream lender might not approve a mortgage for a business owner or retiree who makes money from stocks or pensions. In this case, they might have to look for a complex prime deal. You should still be able to choose from deals like fixed-rate, capped-rate, and discounted mortgages.
Depending on the type of problem and the amount of money you owe, your credit rating can be light, medium, or heavy. Defaulting on loan payments, mortgage arrears, bankruptcy, and CCJs are all types of debts that can affect this.
The good news is that if you stick with a subprime mortgage deal for about three years, your credit score is likely to have gone up. Then, you could refinance on the regular market and get a lower rate.
