How to Get Recognised for a Mortgage Loan With Bad Credit History

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This is not as easy as you’d like it to be, unfortunately. Getting a mortgage with poor credit is a bit like finding a pot of gold at the end of the rainbow, nigh on impossible unless you already know where the pot has been buried.

The best bad credit loans online, for example, may not in practice equate to mortgage lending. In normal circumstances bad credit rating loans apply to short term or secured loan situations. So you may be able to remortgage with a bad credit rating, but doing it first time around is no walk in the park.

The normal key factor in bad credit lending is security. The worse your credit rating the more security you will need to provide. So for example you may need to put an existing property up as security against the mortgage payments on a new one. This only works where the existing property is owned outright and is often used in cases where first time buyers apply for a mortgage and get their parents to secure them.

Your parents may be great if you need a loan – or they may not be in a position to help you out. In which case your first port of call should be to a mortgage broker, who can tell you in black and white whether you can get a mortgage based on the credit rating you have.

Your other key factor is the amount of deposit you have saved. If you have a huge deposit but not enough to buy the house, then it’s much more likely that the mortgage lender will fill in the gap for you.

Mortgage lending is based on your credit rating and your income. If you have a significant income you may find that mortgage lenders are willing to accept you even if your credit rating is below average. Certainly the more money you earn and the more you have as deposit, the better recognised you will be for mortgage loans.

That said, the ultimate lending amount is calculated according to your credit history as well as your earnings – which means whether you have cleared loans and debts in the past or whether you are still paying them. I, for example, have a pretty decent credit rating – but I still had to pay off my credit card in full before I was accepted by a mortgage lender.

So one way to get recognised for a mortgage loan with bad credit is to pay off an existing loan. And one way to do that is to consolidate your loans into one payment.

Finding the best bad credit loans online for this purpose is easy enough. There’s plenty of choice and little required in the way of security. So be aware that bad credit lenders, while they are great if you need a loan in specific circumstances, may charge very high interest rates. Your mortgage payments won’t look so good if your loan repayments are already hurting.

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