Find out how you can still get a Mortgage even with bad credit history!
Mortgages for people with a poor credit history
April 12th, 2010
It can be difficult for people with a poor credit history to get a mortgage. This is especially so after the credit crunch. When it is possible to get a loan these tend to have higher interest rates, lower deposits and more stringent terms and conditions. This is because of the possibility of default.Defaults are one of the most expensive events for a mortgage provider. The act of chasing late payments and defaults can be time consuming for bank staff and repossessing a house can be reasonably expensive, without any certainty that the house will recoup the loan that has been advanced for the house.
One of the strongest predictors of whether a house buyer will default is their previous credit history. This will mean that many home loans are only available to people with an excellent or good credit rating.
Specialist home loan products that are available to people with poor credit will often have conditions on who can apply for them. Some products may be open to people with a limited amount of paid defaults (in effect very late payments) but not to people with court judgements. Other loans may be available to people with court judgements but not to bankrupts, while other products may be available to discharged but not un-discharged bankrupts. In the specialist lending market there is a great deal of variation as to just how bad the credit is allowed to be, in particular in relation to the bad credit events. These gradations can affect the interest rate allowed and the deposit attached.
There are some bad credit home loan products with mainstream lenders, although this usually is in relation to the credit rating rather than to specific events such as previous mortgage defaults. Specialist loans for constructing a house, rural houses or lo doc loans can be hard to get from a mainstream lender.
There are many specialist lenders who will provide loans to people with bad credit. They will be where the home loans for people with very bad credit and specialist home loans can be obtained. These lenders tend to be non-bank finance providers and they tend to sell only through brokers.
Mortgage Brokers tend to be a very good choice for a borrower with impaired credit. Although a broker does cost money to access, they will often be the only people who can get the full range of home loans.
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