There are various reasons why a person might choose to take out a bad credit mortgage. It might be that your credit rating isn’t quite what lenders are looking for, or that you have a debt history that makes you a risky prospect.
No matter what the reasons behind a lenders’ decision, it’s important to remember that some specialist companies will still consider your application.
In most cases, a three-step process will be followed before a lender determines whether you’re going to be accepted for a bad credit mortgage.
1. Taking a closer look at your credit report
Most standard lenders will simply accept your credit report at face value, but there are instances where there might be explanations for what it shows. Specialist lenders will often recommend that you settle any defaults on existing loans in order to improve your rating.
Once these changes have been made, your new and updated credit file can be produced to lenders, therefore increasing the chances of being accepted.
2. Compiling a loan proposal
Having a comprehensive loan proposal can prove really useful to lenders. This will outline the specifics of the mortgage and the type of repayment options that you can afford on your bad credit mortgage.
This is also an opportunity to see the likely charges and fees you could face as a result of taking out the home loan.
3. Putting forward your application
Once your application has been thoroughly assessed – and you’re happy with what the supporting documents encompass – it’s time to put it forward to prospective lenders.
Any decent bad credit mortgage adviser won’t do this until they’re satisfied that your chances of approval are at their highest. Several refusals can reflect badly on your credit rating, therefore making it more difficult to secure finance in the future.
