How Easy Is It To Get a UK Mortgage If You Have a Bad Credit History?

How Difficult Is It To Get a UK Mortgage Loan With A Poor Credit Rating?

There are a lot of people who will face credit problems at some point during their lives. As a matter of fact, just last year, mortgages for people with a poor credit history represented more than 14% of UK home loans. This portion continues to grow year after year.

There are many different reasons that cause people to get a negative credit score. Frequently, the person is clearly a victim of bad luck. Common circumstances might be Bereavement, Illness, Separation, Redundancy or Bankruptcy. These situations could cause people to default on their house payments.

Basic indications that you're likely to have a poor credit score are: You have declared bankruptcy. You have at least one court judgment against you. You have entered into debt agreement. You have been in arrears with a previous loan.

Until lately, having a poor credit score could seriously limit your potential for getting a home loan. It was likely that you'd need to see a mortgage lender expert with a much higher interest rate than regular borrowers.

Now, UK Mortgage Lenders are becoming more sympathetic to those people with bad credit history. They're much more interested than before in making a point to seek out those that are normally good borrowers but have simply had a bit of bad luck. Some general lenders will now offer mortgages for those with a bad credit history.

Within the past several years, the range of UK mortgages from banks and building societies has remarkably grown. This increased competition only means that the mortgage deals being offered to borrowers with poor credit are better. There's lower rates and terms that are more favourable. One of the biggest advantages when doing business with these mainstream lenders is that they will often offer you the opportunity to switch to one of their lowest interest rate mortgages after a few years - as long as you have been paying your payments on time.

In fact, those with only marginally adverse credit histories will usually find that the rates they are offered are no more than 1% higher than the lender's standard variable rate. Occasionally they're even eligible for the exact same mortgage deals being offered to mainstream borrowers.

For those who have really poor credit, what will generally happen is, the more severe the credit history, the higher the interest rate becomes. At the high end of the scale, newly discharged bankrupts as well as more serious credit problems will probably pay interest rates up to 11%. But these rates will not pertain to the majority of borrowers, so don't be put off.

If you have found yourself with a really poor credit history, one thing that can help do is to make consistent payments on any financial purchase. The mortgage lenders just want to see payments that are regular and unbroken. It's not the amount that matters. It's the reliability they are looking for. Combined with a reliable income, this will really help better your credit rating. Those two things are the main ways that people with positive credit scores got those scores.

Mainstream borrowers now anticipate and expect many different choices of UK mortgage deals: fixed rate mortgages, tracker mortgages, variable rate mortgages the list doesn't end there. The good thing is that most mortgages are now made available with poor credit rating mortgages too. A lot of lenders working with bad credit cases are now offering similar choices to those available in teh mainstream market. Fixed rate mortgages over two or three years are becoming more and more popular because they give a level of security. Even if interest rates rise, payments on a fixed rate mortgage stay the same.

To get the best mortgage deal, it pays to pick up some advice from a professional when trying to find a credit mortgage or remortgage. First consider speaking to a bad credit mortgage specialist, who will be able to search a very wide selection of home loans for you. Shop around to discover a deal that suits your needs. If your financial situation is in order now and you've payed all legal commitments on your previous debts, you'll have an excellent chance to get a mortgage or remortgage.

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Brian Harbinson regularly contributes to MortgageSorter.co.uk, a UK site that specialises in bad credit mortgages.

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