Bad Credit Mortgages

Bad Credit Mortgages | Mortgage Advice | Manchester Money

Last updated: 10th April 2023

If you have bad credit, getting a mortgage can be a real challenge. Lenders may view you as a high-risk borrower and charge you higher interest rates, or require a larger down payment or other forms of security to mitigate their risk. However, don’t lose hope. There are options available to help you get onto the property ladder.

Understanding Bad Credit Mortgages

Bad credit mortgages are designed for individuals who have a poor credit rating or history. They are offered by specialist lenders who are willing to take on borrowers who are considered high risk. These mortgages are often referred to as “subprime” mortgages, and they typically come with higher interest rates and more stringent eligibility criteria than standard mortgages.

When you apply for a mortgage, lenders will assess your creditworthiness based on factors such as your credit score, income, and employment status. Your credit score is a number that represents your creditworthiness. It is based on your credit history. If you have missed payments, defaulted on loans, or have a history of bankruptcy or CCJs, your credit score is likely to be low.

Eligibility Criteria for Bad Credit Mortgages

To be eligible for a bad credit mortgage, you will need to meet certain criteria. These criteria may vary depending on the lender, but they typically include a minimum credit score, income requirements, and down payment requirements.

Lenders will also carry out an affordability assessment to determine whether you can afford to repay the mortgage. This assessment considers your income and outgoings to determine how much you can afford to borrow.

If you have a history of bankruptcy, CCJs, or other financial issues, this may impact your eligibility for a bad credit mortgage. However, some lenders are more willing to take on borrowers with a chequered financial history than others, so it’s important to shop around to find the right lender for you.

How to Improve Your Chances of Getting a Bad Credit Mortgage

If you have bad credit, there are several steps you can take to improve your chances of getting approved for a bad credit mortgage. These include:

  • Improving your credit score by paying off debts and disputing errors on your credit report.
  • Saving for a larger down payment to reduce the risk to the lender.
  • Seeking advice from a mortgage broker who specialises in bad credit mortgages.
  • Research and compare mortgage options to find the right one for you.

Further Guidance

Getting a mortgage with bad credit is difficult, but it’s not impossible. Bad credit mortgages can help individuals with poor credit to purchase a home, but they can also come with significant financial risks and costs. It’s important to carefully evaluate the terms and conditions of any bad credit mortgage offer and to seek expert advice before deciding.

Remember, taking on a mortgage is a big financial commitment, so it’s important to ensure that you can afford the repayments and that the property is a suitable investment for your long-term goals. With the right approach, patience, and diligence, you can find a bad credit mortgage that works for you and helps you achieve your dream of homeownership.

If you’re struggling to get approved for a mortgage due to bad credit, don’t lose hope. At Manchester Money we have brokers who specialise in bad credit mortgages. We understand the challenges you’re facing, and our here to help.

Get in touch today to see how we can help? Simply give us a call on 0161 503 9232 or click to send us a message.

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