Getting a mortgage with bad credit can be tough as most lenders prefer borrowers who have a good credit score and there is nothing wrong in that as lenders would prefer lending to people whom they are sure would repay their money. But people with a bad credit score do not have to worry anymore and wait till they have a good credit score to get a loan they need. There are special lending agencies those are there to help people with a bad credit scores whose applications are likely to get rejected elsewhere.
How does this works?
Having a decent salary or having a huge bank deposit always does not guarantee you a bank loan and this might seen unfair to you but this is how it is. Having a good credit score is important to get your loan application approved amongst most of the lenders.
Lending agencies and banks are very cautious about whom they are lending to and hence, they make sure of checking whether the potential borrowers have a history of defaulting debt payments. They would also check if you have CCJ reported against you. In such a scenario, chances are high that your loan applications would be rejected even if your financial problems occurred years before.
What mortgages can I apply for?
Mortgages for bad credit in UK are offered by few special lending houses and you can go for these if your score is far from the perfect. These mortgages are known as adverse-credit mortgages or sub-prime mortgage. In such cases the interest rates are very high and you also need to offer a more sizeable deposit as far as collateral is concerned as most lenders would ask for at least around 30% of your property deposit and this is quite more as far as standard mortgages are concerned, the percentage is only around 10% or less than that.
Make sure you check your credit score
When you apply for a mortgage, then make sure of checking your credit score and there are few credit rating scores that would offer you this. Simple things like closing credit card accounts that you do not use and not having an electoral roll registration can affect your credit score in the negative way.
Getting mortgages with bad credit is not easy and there are many ways of repairing your credit score. Implement them so that you no longer have to pay high interest rates.
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