Mortgages for those with bad credit
First off, there is no such thing as a ‘bad credit mortgage’. Mortgages for those with bad credit operate in exactly the same way as conventional mortgages. They also come with the same options with regard to the type of mortgage available.
While those with bad credit are likely to be rejected by mainstream lenders for conventional mortgages, there are specialist lenders who can help.
Unfortunately, you’re likely to face a couple of extra financial barriers. Firstly, the lender is likely to demand a much larger deposit than they would on a conventional mortgage. Many lenders cap the amount that they’re prepared to lend to someone with a poor credit rating at 60% of the property value, with just a few lenders prepared to go as high as 80%.
In addition, interest rates are likely to be much higher than for a conventional mortgage. On the plus side, if you do take out one of these mortgages and start to show you can meet the repayments, over time you may start to repair your credit rating. When your credit rating has recovered, you may be able to remortgage onto a better deal.