Getting a bad credit mortgage

Many people, understandably, think that getting a mortgage with bad credit is an impossible feat. A bad credit rating can be like a constant weight around your neck, often unfairly, and doesn’t present an accurate picture of you as an individual. Sure, you might have a bad credit rating, but there may have been a variety of factors out of your control which caused you to get that credit rating in the first place.

You might have missed out on a credit card payment because you had to pay for emergency repairs to your car, for example. Similarly, you could’ve had a CCJ awarded against you for some reason or another and your credit score hasn’t recovered since. You could have even had serious health problems or gone through an addiction, and gone bankrupt as a result.

Your average mortgage lender, of course, won’t see any of this. They’ll only see a number on a screen telling them not to give you a mortgage. It’s because of this that getting a mortgage with bad credit can be a difficult thing to do, but that doesn’t make it impossible.

Will I have to get a bad credit mortgage?

There’s no such thing as a bad credit mortgage. This is a common misconception – you’ll still be able to get a standard mortgage, but they’ll most likely have higher interest rates or extra charges, hence the term ‘bad credit mortgage’. They’re also known as ‘adverse credit mortgages’ or ‘subprime mortgages’.

The good news is that after a few years of paying back a bad credit mortgage your credit rating will have repaired itself to some degree due to your payments towards it (as long as they’re on time!). This means that you could move onto a better mortgage that has a lower interest rate in a few years, so don’t worry about being stuck on a bad credit mortgage forever.

So, can I get a mortgage with bad credit?

Yes. You’ll still be able to get a mortgage, but at the same time you’ll have to accept the fact that not every lender is going to be itching to give you one. Some high street banks might be averse to lending to you, but if you scout around enough then you’ll be able to find a lender who’ll look past your credit score and

Be careful when you actually apply for a mortgage too – if you’re rejected when applying for a mortgage this will only further negatively affect your credit rating, making it less likely you’ll be accepted for a so-called bad credit mortgage.

Couldn’t I just improve my credit score?

If you’re set against getting a bad credit mortgage, then there’s always the alternative of simply improving your credit score and then applying for a mortgage from one of the more popular, high street lenders. You can do this by paying off debts you owe on your credit cards, keeping your outstanding balances low and making payments for things such as rent on time.

This is, of course, a lot easier said than done. You might not be in a position to simply pay back debts that you owe just yet, and if you’ve got negative marks on your file such as CCJ’s or bankruptcies then these will remain on your file for at least six years – a time period you aren’t likely to want to wait if you’re looking for mortgages now.

Getting a mortgage with bad credit sounds a lot worse than it is, when in reality you’ll only have to deal with slightly increased rates, charges and deposits for a small time – as long as you make the payments to the bad credit mortgage on time, your credit score will take care of itself. This grants you the obvious benefit of being able to get a mortgage immediately, move on with your life and, if you wish to, change your mortgage in the future once your credit score has improved.