Buying a home is difficult at the best of times. Even if you’ve managed to pull together an enormous deposit, you still need to convince the lender that you’re worthy of a mortgage. The problem is that now more than ever, major banks and lenders scrutinise applicants’ credit reports and financial status in the finest detail.
On the plus side, some of the more proactive and dynamic lenders on the market are acknowledging the imperfections in the system. Providing an invaluable lifeline for responsible borrowers across the country, bad credit mortgage specialists are appearing in record numbers. Also referred to as subprime mortgages, bad credit mortgages are designed from the ground up with poor credit applicants in mind.
What’s the Deal with Subprime Mortgages?
If your mortgage application (or applications) has been turned down by the major names on the High Street, you needn’t count yourself out of the running. As far as the biggest banks and lenders go, the answer is typically yes – bad credit will scupper your chances of getting a mortgage. By contrast, you could be the perfect candidate for a subprime mortgage with a specialist lender.
Hence, bad credit needn’t scupper your chances of getting a mortgage – it’s simply a case of applying in the right places.
Finding the perfect subprime mortgage to suit your requirements and your budget can be simplified with the help of a broker. Rather than taking your business direct to one or two lenders, it simply makes sense to compare offers from as many subprime specialists as possible. This is particularly true if your credit report is extensively damaged, as it may be more of a challenge to qualify for the mortgage you need.
You may also find your eligibility for a subprime mortgage increases in accordance with the size of the deposit you are able to provide. Bad credit mortgages are designed for ‘higher-risk’ applicants in the eyes of lenders, so anything you can do to reduce the risk on the part of the lender will help your case.
How to Rebuild Your Credit Rating
If you need a mortgage as soon as possible and your credit score isn’t up to scratch, a subprime mortgage could be the only realistic option. If you’re planning ahead, however, there are steps that can and should be taken to build (or rebuild) your credit rating.
Examples of which include the following:
- Eliminate as many unnecessary debts as possible
- Reduce your credit card balances
- Don’t apply for credit you don’t absolutely need
- Pay all credit and utility bills on time
- Cancel credit cards you don’t use anymore
- Avoid going overdrawn where possible
In addition, it’s also essential to take a look at your credit report and see where the majority of the damage lies. This will put you in a much better position to do something about it, while at the same time highlighting any discrepancies that could stand to be corrected. – ukpropertyfinance.co.uk