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What Are The Actual Circumstances Behind Mortgage With Bad Credit?
Bad credit situation is always a significant cause of mess in financial life. It makes everything difficult, but the reality is that smart humans have created ways to deal with it. What can be more daring than making efforts to get a mortgage with bad credit history?
Knowing the realities of a situation is always beneficial to make the right types of efforts. Bad credit situation is a significant obstruction in the way to a mortgage. But if you know all the issues or conditions that may arise, you can at least make efforts in the right direction.
Financial barriers that you may face
The more aware you are about the difficulties, the better is the plan of action. Here is a bunch of issues that normally arise.
Lenders cap the loan amount – No mortgage company wants to take the risk for an applicant with poor payment history. It is the reason; many lenders put a cap on the loan amount. They do not provide more than 60% value of the property through a mortgage. Some rare lenders dare to go up to 70% and above than are the most unique.
Interest rates are higher than the conventional ones – A shift in a situation causes a change in the respective solution too. Low credit rating arises doubts in the mind of the lender about the repayment capacity. As a result, it prefers to offer funds on higher rates.
Response from different lenders on poor credit rating
Every mortgage company has different policies that decide how it reacts on an applicant with a derailed credit history.
The chart below can help you predict the decision in your situation.
Fund provider - Acceptance conditions for low credit history applicants
Bluestone - Yes, but only if there are no arrears in the last 12 years.
Halifax - Decides depending on the case
Virgin Money - No arrears should be there in the last 6 months
Barclays - Decision on case-by-case basis
HSBC - NO (not accepted)
Santander - No arrears in last 12 months
Accord Mortgages- Accepts only in case of only one missed payment in the last 2 years, i.e. 24 months
Did you see this? There are many other lenders in the market, but you can at least have an overall idea. More or less, all the above are similar in response. Taking a concept helps you predict the decision of the mortgage company, and you can prepare to apply accordingly.
‘No broker required’ attitude might waste your time
More than 50% of the homebuyers use brokers. They are not always bad or tricky. After all, the broking companies become the platform for numberless lenders through which they reach to millions of customers.
To talk about the fact, a mortgage company may not tell you all the realities about its policies. It means you get biased information. On the other hand, a broker has no concerns for any individual loan company. It tells you all the facts about the available mortgage providers. Their policies, their fees, charges, hidden charges, etc. a broker knows everything about the industry.
In bad credit situation, it can be challenging to find a deal by yourself. You should not hesitate to take the help of the broking companies in case of any difficulty while obtaining funds. The broking companies like ShineMortgages, John Charcol, etc. are the established names in the UK. Do not restrict yourself and explore more options for a satisfying result.
Bad credit due to missed payment and delayed payment - Both are different
Every little reason for your poor credit score affects the result on the mortgage. Here are the two common situations and their effect on your home loan possibilities.
Mortgage with missed payments - As you know, this situation is complicated and demands extreme caution as every small factor works. The more historic the missed payment, the better are the chances of loan approval. Recent incidents like this may cause a rejection then and there.
Mortgage with late or delayed payments - It is a bit better situation than the one mentioned above. However, that does not mean you are in the safe zone. Now, the lenders are much more strict and stringent on this part. Some may consider your application if the reason is genuine, for example, money crisis due to a significant economic change like Brexit. However, most of the mortgage companies may not consider it.
The outcome is - the possibilities are there but with terms and conditions. The best chance can arise only if you work hard and earn a bit boost in your credit score. Nothing can be more promising for a lender than improved financial behaviour. Without wasting any time, you should start working on the preventive measures at least before six months of applying for a mortgage.
Hi, I am Stacey, from the Midlands, working as Financial Consultant in the leading financial lending agencies Shine Mortgages, here in the UK. I like helping people, especially when they come to me asking for emergency funds. It is challenging, but equally exciting.
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