Have you ever applied for a home loan, only to find out that your application has not been approved? You’re not alone in this scenario – but the good news is, there’s a solution to your woes. Bad credit mortgages are designed to help borrowers who don’t fit a lender’s ideal mould.
Whether you’ve just started a new job, missed a couple of important payments or are self-employed, bad credit home loans can help you into your dream home. However, as a type of specialist loan, these mortgages aren’t assessed quite the same as conventional products. The following are a few points to note when applying.
The type of credit impairment
A lender who offers bad credit home loans will judge your application based on your individual circumstances. What they will do is take a closer look at the nature of the entry. This includes how long it has been listed, whether it has been recently paid or is still an active debt, and what kind of default it is. For example, an older impairment due to a missed utility bill payment doesn’t have quite the same severity as, say, a recent mortgage default.
The risk factor
If your credit report has raised a few red flags with traditional lenders, it’s because you’ve been considered a riskier borrower than someone with a spotless record. A bad credit lender won’t just cast you aside if there’s a black mark on your credit history, but there are a few things that can influence what kind of product they will eventually offer. This might include the loan-to-value ratio you’re applying for, as well as your financial circumstances and employment status.
Once you’ve got a fair understanding of how these loans are assessed, you can improve your chances of being approved – and finally securing the home you’ve always wanted.
