Bad Credit Mortgage Lenders – Finding the Right Mortgage
The mortgage market when bad credit is present, can feel daunting. Whether you’ve had financial difficulties in the past, such as missed payments, a County Court Judgment (CCJ), or even bankruptcy, securing a mortgage might seem like an impossible task ahead.
The good news is that there are lenders that specialise in providing mortgages to individuals with poor credit histories.
These are often referred to as bad credit mortgages or adverse credit mortgages, and while they may come with higher interest rates, they can be a lifeline for those struggling to secure financing through traditional means. You should however always explore the whole market rather than assume you need a lender like this and that is a reason to instruct a mortgage adviser that can do this for you.
At Kerr & Watson, we help clients with less-than-perfect credit find the right mortgage.
Our expert team is here to guide you through the process and provide tailored advice for your situation to see what your options may be.
What is a Bad Credit Mortgage?
Contrary to popular belief, there is no specific product called a “bad credit mortgage.”
Instead, these are standard mortgages that can be offered to individuals with poor or adverse credit histories subject to meeting lender criteria.
The difference lies in the lending criteria and terms, which are often more flexible but come with higher interest rates and stricter deposit requirements.
Common Reasons for Bad Credit:
- Missed payments
- CCJs (County Court Judgments)
- Bankruptcy
- Debt Management Plans (DMPs)
- Defaulting on loans or credit cards
These credit issues can make mainstream mortgage lenders hesitant to approve applications.
However, specialist lenders may be more willing to take on this risk by offering bespoke solutions for individuals with poor credit.
Kerr & Watson works with a network of these specialist lenders to find the best possible mortgage solution for your unique situation. Our advisers would work out whether these lenders would be suitable for you or not, looking at your unique situation.
How Do Bad Credit Mortgages Work?
The primary difference between a bad credit mortgage and a conventional mortgage is the interest rate and deposit requirements.
Lenders see borrowers with adverse credit as higher risk, which is why they charge more interest to compensate for that risk.
Higher Interest Rates
You may pay a higher interest rate than someone with a flawless credit record. This means your monthly mortgage repayments will likely be higher if this is the case.
Larger Deposits
While conventional mortgages might require a deposit of 5-10%, bad credit mortgages typically ask for a larger deposit, ranging from 20-25%. This helps the lender offset the risk of default. This differs per lender so speak with a mortgage adviser that can guide you on this.
At Kerr & Watson, we’ll help you explore options that could lead to refinancing in the future once your credit has improved. Over time, as you make timely repayments, your credit score can recover, potentially allowing you to remortgage at a lower interest rate.
Find out Your Options
How Kerr & Watson Can Help You
At Kerr & Watson, every situation is different. We work closely with our clients to understand their financial circumstances and guide them through the mortgage application process. Here’s how Kerr & Watson may be able to help:
- Access to Specialist Lenders: In addition to high street lenders, we have strong relationships with a range of specialist lenders who may be willing to approve bad credit mortgages.
- Tailored Advice: We provide personalised advice based on your credit history, financial situation, and mortgage goals. We look at the whole market, only when we fully understand the background.
- Remortgaging Options: Once you’ve repaired your credit, we can help you explore remortgaging options to potentially secure a more suitable deal in the future.
By working with a knowledgeable mortgage broker like Kerr & Watson, you can explore all of your available options and find a solution that works for you. Our expert team is here to help you through the process.
Conclusion
Securing a mortgage with bad credit might feel challenging, but it is by no means impossible depending on your situation.
With the right advice and access to specialist lenders in addition to the high street, you may still be able to find a mortgage that fits your financial situation.
At Kerr & Watson, we’re dedicated to helping our clients understand the mortgage market taking into account their full background.
If you have concerns about your credit history and are unsure of your options, contact us.
Our team is here to guide you through the process and provide you with tailored advice to help you look for the best mortgage solution.
