Is it Hard to Get a Mortgage Loan If You Currently Have Bad Credit?

There are many who experience credit problems at some point in their life. Actually, last year, mortgages for people with poor credit represented about 14% of UK home loans. This segment continues to grow year after year.

There are different reasons that cause people to get a poor credit score. Often, the person has run into bad luck. Common circumstances include Sickness, Separation, Redundancy, Death or Bankruptcy. Any of these factors could cause homeowners to fall behind on their house payments.

Basic indicators that you are likely to have a negative credit record are: You have one or more court judgments against you. You have entered into debt agreement. You have been declared bankrupt. You've been behind with a previous home or other bank loan.

Before now, having poor credit could severely limit your potential for getting a home loan. It was likely that you'd need to speak to a mortgage lender expert and take a higher interest rate than normal borrowers.

But today, UK Mortgage Lenders have become more open-minded to potential homeowners with poor credit histories. More than ever before, they have more interest in making a point to seek out those who are generally good borrowers but have suffered some bad luck. Most standard lenders will now provide mortgages even with an unperfect credit history.

Within the past few years, the range of "credit repair" and "adverse credit history" UK mortgage sales from banks and building societies has grown remarkably. This increased competition can mean that mortgage deals being offered to borrowers with bad credit have been improved. There are lower interest rates and more welcoming terms. The advantages of borrowing from these mainstream lenders is that they will usually offer you the chance to eventually move on to one of their regular best buy mortgage deals in about three years - as long as you have been current with your payments.

In fact, those with only slightly poor credit ratings often find that the interest rates that were offered to them are no more than 1% above the usual variable interest rate. Sometimes they're even eligible for the exact same mortgage deals being offered to mainstream borrowers.

For people who've got really bad credit, what will usually happen is, the more severe the credit score, the higher the interest rate goes. At the high end of the scale, recent bankruptcies and others with more serious credit matters will probably pay rates up to 11%. But these won't apply to most borrowers, so don't let that discourage you.

If you have ended up with a very bad credit rating, one thing that will help is making constant payments on any financial purchase. The mortgage lenders want to see payments that are constant and unbroken. It's not the amount paid. It is the consistency they look for. In addition to a constant annual income, this will really help improve your credit record. These two things are the prime ways that those with excellent credit ratings got those ratings.

Mainstream borrowers now anticipate and expect a wider range of choices in UK mortgages: variable rate mortgages, tracker mortgages, fixed mortgages – the list goes on. The really good news is that most types of mortgages are now available with poor credit mortgages as well. Almost all lenders working with the poor credit cases now offer comparable choices to those offered to mainstream borrowers. Three year fixed rate mortgages are becoming popular for the security they offer. Even if interest rates rise, payments on a fixed mortgage remain the same each month.

To find the best mortgage deal, it's worth it to pick up some advice from the experts when looking for a remortgage or mortgage. Consult a bad credit mortgage specialist, who could search a very large selection of home loans for you. Search to locate the deal that fits you. If your finances are under control currently and you've met with all legal commitments on your debts, you've got an excellent chance to get a home loan.

Authors biog:

Brian Harbinson regularly contributes to MortgageSorter.co.uk, a UK site specializing in everything you wanted to know about UK mortgages but were afraid to ask