Can you get a mortgage with bad credit?
So, you’ve got a bad credit record. Perhaps you’ve missed a few credit card payments, have had a County Court Judgment awarded against you or have previously been made bankrupt. Does this mean you can’t get a mortgage?
Years ago, the answer probably would have been ‘yes’. These days though, lenders are much more prepared to lend to people with a less than perfect financial history. The technical (and slightly unflattering) term for this type of mortgage is sub prime. They are also known as bad credit or adverse credit mortgages.
Try a mortgage broker
You’ll need to approach a mortgage broker to get a bad credit mortgage and they will search the market on your behalf. Increased interest in this type of mortgage has resulted in most lenders offering bad credit mortgages as part of their service these days.
What sort of deals can you get?
As you might expect, the interest rate you’ll be charged for a bad credit mortgage will be slightly higher than for an ordinary mortgage, and exactly how high will depend on how bad your credit history is. Arrangement fees and redemption charges tend to be higher than for a normal mortgage too.
Although increased competition has resulted in better rates becoming available, there is still a big difference between the best and the worst deals on the market.
Like ordinary mortgage deals, you should be able to get a fixed-rate bad credit mortgage in order to protect yourself from interest rate rises. Other types of interest rate such as discounts and trackers are also available.
Even better news is that once you’ve had a bad credit mortgage for about three years, and not missed any repayments, you should have repaired your credit record to such an extent that you’ll then qualify for a cheaper mortgage deal from a standard lender.