Finding the right bad credit mortgage in 2019 is about understanding which lenders to approach and how to make your application appeal. You may need to take steps to improve your credit score in the long-term or provide a larger deposit. Working with a specialist lending broker makes it easier to understand what’s required and accelerates the process.
How to find the right bad credit mortgage
Before you approach lenders, make sure you understand why you’re looking for a bad credit mortgage. That is, why do you have a poor credit score, and what does it communicate to lenders?
Credit scores are comprised of several factors including how long you’ve been borrowing, your payment history, the number and type of creditors you owe. It’s likely that only one or two of these factors bring your credit score down. For example, you may have just one or two creditors, but a poor payment history with both.
Once you have a thorough understanding of your credit score, you can begin to work out which lenders are likely to approve your application. Every lender sets their own approval criteria. Some may only work with borrowers in a certain credit score bracket, while others may weight particular factors more or less harshly. Lenders may also change their opinion according to whether you have regular income or other assets that could act as security.
As a bad credit applicant, it’s also worth being flexible in your approach to loans. Some lenders only offer fixed-rate, fixed-term mortgages to those with poor credit. What they offer may not be what you consider the best deal available – but it’s still a good option if prime lenders are likely to turn you down. You may also have to accept higher interest rates or provide extra paperwork.
How to get your bad credit mortgage approved
Work with a specialist lending broker
Specialist lending brokers focus on non-prime loans. They help borrowers with poor credit history or little documentation find a lender who’ll accept the application. Employing the services of a specialist broker saves you a lot of time researching lenders and means you’ll get help with getting your paperwork in order. It’s little things like this that speed up the process and get you buying your home sooner rather than later.
Provide a larger deposit
Should your financial situation allow it, building a larger deposit may make you more favourable in the eyes of certain lenders. By putting more money down in the first place, lenders consider you more invested in making repayments and ensuring the security of your investment. They may be inclined to offer you a better rate, or accept a lower credit score if you can put up a higher deposit.
Improve your credit score
If you’re looking for a bad credit mortgage, you’ll likely already know what your credit score is – but if you don’t, now’s the time to find out. However, don’t just learn your magic number, understand why your credit score is low and what you can do to improve it. Show potential lenders that your finances are in control by taking steps to improve your score and show that you’re not a long-term risk.
If you’re looking for a bad credit mortgage, talk to a Red Rock broker. Specialist lending is our area of expertise, and our brokers work with a wide range of financial institutions to help all our borrowers find the right solution.