Bad Credit Mortgages

Bad Credit Mortgages

What mortgages are available for people with bad credit?

One in four people in the UK would have trouble getting a mortgage as their names are on a credit blacklist. This blacklist doesn't actually exist, according to Experian, who are the UK's most prominent credit referencing agency. This won't be of any comfort though to someone whose mortgage application has been rejected, and finds out that it's due to their credit rating.

The reasons you can be turned down for a mortgage are manifold. Have you only been self-employed for a short period and so don't have three years audited accounts? You'll have trouble getting a mortgage.

Maybe you have a county court judgement (CCJ) against your name. This is where a decision is made against you in a county court and you don't pay within the timescale defined. You could get a CCJ for something as trivial as missing payments into your CD club. Conversely, you could get a CCJ for having missed mortgage payments, which is a far more serious problem.

But this isn't the end of the world. What is the reason for you missing your mortgage payments? Ultimately, the reason could be a one off problem that is unlikely to happen often, which doesn't mean you are always going to default on your mortgage payments. A divorce for instance, which can result in payments being stopped into the mortgage on the family home should things turn nasty, with both parties waiting until the settlement is reached.

Redundancy has an effect as well, as it could take 6 to 12 months to find a job, and you may have needed to come to an arrangement with the mortgage lender so you can make reduced payments. This will go on your credit record, but may not mean you won't be able to make mortgage repayments now.

Unforeseen events like these happen, and don't mean you are a habitual non-payer. Should you be in this position, you may have found searching for a mortgage like banging your head against a wall. But you shouldn't completely despair, because outside the range of traditional mortgage lenders, help is at hand.

US financial institutions have brought over bad-credit lending to the UK about five years ago. Also, called non-standard, sub-prime, non-conforming or impaired credit mortgages, these deals offer a new kind of choice for borrowers with credit problems.

The onset of automated credit scoring methods to decide who can get a mortgage means that people's mitigating factors are regularly ignored, and so demand for non-standard mortgages is growing.

You do need to understand that non-standard mortgages are more expensive. You are a higher-risk customer and your interest rates will reflect that. You should always go to your bank and building society first.

What mortgages are available for people with bad credit?

© AskFinancially.com 2008

Mortgage Advice

Insurance & Loans

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Bad Credit Mortgages

What mortgages are available for people with bad credit?

© AskFinancially.com 2008

Mortgage Advice

Insurance & Loans

Copyright