Top tips on bad credit mortgages
Take a look at our top tips as a starting point for finding the right deal:
1.Speak to a mortgage adviser
A mortgage broker or independent financial adviser should have access to a range of bad credit mortgage deals from all lenders on the market. This will give you the best chance of finding the best deal to suit your needs.
2. Shop around
One or two high street mortgage lenders that cater for the mainstream market also have a subsidiary or affiliated company that deals with bad credit mortgages. If you have tried a mainstream lender and they reject your application, it may refer you to its subsidiary instead. The best deals may not be available from such lenders however, so it may pay off to seek independent advice.
3. Choose the right product
One of the biggest decisions you will make when selecting a mortgage, whether a bad credit deal or not, is whether to go for a fixed rate, a variable rate or a flexible deal. That is, you must decide whether to opt for the security of a fixed rate, which can help you with your budgeting if you are not very financially disciplined, or a discounted variable rate, which may offer lower repayments to start with, but is more risky because your repayments could fluctuate.
4. Repair your credit record
As a general rule, after three years on a bad credit mortgage at a higher interest rate, your credit rating should have been restored to good health. So you should look at remortgaging back to a standard mortgage lender, if possible. However, be warned that this is not as easy as it once was. Lenders have become a lot stricter about who they will lend to and how much they will lend in recent years. As a result, you may find it more difficult to get a competitive deal.