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Is it Difficult to Get a UK Mortgage If You Have Poor Credit?

Many will experience credit problems during some point in their life. As a matter of fact, last year alone, mortgages for people with a poor credit history represented about 14% of all home loans in the UK. This segment grows every year.

There are several reasons for getting a bad credit score. Frequently, the person is just a victim of bad luck. Typical circumstances may be Redundancy, Divorce, A Death in the Family, Poor Health and Bankruptcy. Any of these incidents can cause people to default on their mortgage loan payments.

Some indicators that you could have a less than favorable credit score are: You have at least one court judgment against you. You have entered into debt agreement. You have filed for bankruptcy. You've been overdue with a previous mortgage or other bank loan.

Until lately, a bad credit score could severely limit your chance of finding a mortgage. There was a possibility that you'd be required to see a professional mortgage lender and accept a higher interest rate than usual borrowers.

Now, Mortgage Lenders in the UK are becoming increasingly sympathetic to those people with bad credit history. More than before, they have more interest in seeking out those who are usually reliable borrowers but have had a run of bad luck. Numerous general lenders now offer mortgages even with a bad credit score.

In the past few years, the range of "credit repair" and "adverse credit history" mortgage sales from building societies and banks has grown considerably. The increase in competition can mean that the mortgage deals that are being offered to poor credit borrowers are better. There are more welcoming terms and lower rates. The advantages of doing business with these types of lenders (typically building societies) is that they will often offer you the chance to eventually swith to one of their normal lowest interest rate mortgages within the next two or three years - assuming you've been making your payments on time.

In fact, those with only slightly poor credit scores often realize that the rates that have been offered to them are less than 1% over the normal variable rate. Sometimes they discover that they are even eligible for the exact same deals being offered to mainstream borrowers.

For people who've got terrible credit, what usually happens is, the worse the credit history is, the higher the interest rate charged. At the top of the scale, recently discharged bankrupts along with other major credit matters will probably pay rates as high as 11%. But these rates won't pertain to the majority of borrowers, so don't let this discourage you.

If you have ended up with a very bad credit record, better your situation by making reliable payments on any financial product. Mortgage lenders want to see payments that are unbroken and constant. It's not the amount paid that matters. It's the consistency they are watching. Combined with a reliable salary, this can help you to improve your credit score. These two things are the main ways that people with positive credit scores got those scores.

Mainstream borrowers now expect a wider range of choices in UK mortgage deals: variable rate mortgages, fixed mortgages, tracker mortgages – the list doesn't stop there. The best news is that most home mortgages are now accessible with bad credit rating mortgages as well. Many lenders that work with bad credit cases now provide equivalent choices to those available to mainstream borrowers. Two year fixed rate mortgages are becoming more and more popular because they give security. Even if rates rise, payments on a fixed rate mortgage don't change.

To get the best mortgage deal, it pays to accept some advice from the professionals when seeking a credit mortgage. Think about consulting a bad credit mortgage specialist, who is able to search a wide variety of home loans for you. Do your homework to locate a deal that works for you. If your financial situation is in good order now and you've met all the legal obligations on your past debts, you've got a likely chance to get a home loan or remortgage.

About the Author:

Brian Harbinson is a regular contributor to MortgageSorter, a UK site that specialises in everything you wanted to know about UK mortgages but were afraid to ask