Bad Credit Mortgage Explained
Also sometimes referred to as "Adverse Credit Mortgages" or "Sub-Prime Mortgages".
Often an individual will "presume" they have "bad credit" because when they applied, they were rejected. This may not actually be the case simply because different lenders may have different policies that determine their processing. Often one lender that pieces your situation as a "risk" may not apply to a different mainstream lender. This provides more reasons as to why, using a mortgage adviser is more beneficial.
The main criteria on a credit report that "flags" perceived risk, are missing credit card repayments, loan defaults and making applications for credit too often.
The good news is that there are now numerous second tier mortgage lenders that will accept applications and often approve mortgages for individuals with "bad credit", provided that it is genuine and not to greater risk for the lender.
The bad news is that the interest rates will be higher, simply because the potential risk will be perceived to be higher. That said, using a second tier lender is a fantastic way to rebuild one's credibility, to possibly, at a later date, achieve a position where the lower interest rates, and perceived "risk" slowly becomes a "ting of the past.
It may also require that the LTV (Loan to Value) ratio maybe be higher. In other words, a higher deposit may be required to secure the lending.
Using a mortgage adviser will certainly help an individual with the application to motivate a successful outcome, by helping you with the following:
Provide extra information that you are responsible with utility payments and other payments.
Have good explanations for any past financial difficulties.