Bad Credit? Is A Bad Credit Mortgage A Good Option?
The availability of bad credit mortgages is on the rise with over 800 mortgage products now available according to moneyfacts. If you’ve defaulted on a loan payment in the past or have had a CCJ should you consider a bad credit mortgage? Below we explore what they are: How Do They Work? These mortgages are specifically designed to help those with poor credit scores get moving or to take the first step onto the property ladder. These mortgages are aimed at the extreme end of adverse credit such as CCJs or IVAs (Individual Voluntary Agreements) or bankruptcies, opposed to those who’ve missed the odd utility payment or those who haven’t built up much of a credit history. Mortgages for bad credit tend to come with a higher interest rate to reflect the increased risk to the lender. On average the rate for a mortgage of this type is 4.52% which when compared to the average rate of a fixed-rate mortgage at just 2.54% it is significantly higher.
Who Will Lend Bad Credit Mortgages? Whilst the number of lenders for bad credit mortgages is increasing, every case will be based on individual circumstances. It may be that a high street lender will consider a standard residential mortgage if you have a less than perfect credit history. For example, if a divorce or bereavement have led to a blip in your credit score lenders may look at your circumstances more favourably. If you are concerned that your credit history may affect your ability to obtain a mortgage, contact us today and will be happy to discuss your individual circumstances.go back to all blogs