If you’ve had bad credit in the past, you could still be able to get a bad credit mortgage. Banks and building societies have a range of bad credit mortgages that may be available to those with a poor credit rating.
You might still be able to get a mortgage if you have a bad credit rating, but it will be harder than usual to find a lender. Most bad credit mortgages are only available through brokers, who will assess your individual circumstances and try to find a bad credit mortgage for you.
Bad credit mortgages often have a significantly higher interest rate (and thus larger monthly repayments) than a normal fixed or tracker mortgage, and you’ll probably need a larger deposit as well: instead of a 5% or 10% deposit, which is usually enough for a fixed or tracker mortgage, bad credit mortgages want a deposit of 15% – LTV of 85% – or more.
Some bad credit mortgages use an interest rate that tracks the LIBOR – the London Inter Bank Offered Rate, which is the rate used by banks when they lend money to each other. If you get a LIBOR tracker mortgage, your interest rate will track the LIBOR for a set amount of time – and then, like other mortgages, it will revert to the lender’s standard variable rate (SVR), which is usually a couple of percentage points higher.
Yes, you might still be accepted for a mortgage, even if your bad credit record might put off many lenders.
When it comes to banks and building societies, there are are a few things that are likely to give you a bad credit record:
If you want to improve your credit record and gain access to better mortgages and other credit products, there are a number of things you can do – but be aware that building up your credit rating is usually quite a slow process. For example, if you’ve recently applied for a few credit products, your credit rating may dip down – and not bounce back for about six months. If you haven’t borrowed much in the past, you could obtain a credit building card and use that consistently for a while – and your credit record should improve.
Perhaps most importantly for building up a positive credit record, always be on time with your your loan and credit card payments – and don’t exceed your agreed credit and overdraft limits.
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Last updated: 16 April, 2018
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