A bad credit rating can quickly become the bane of your life if you are trying to purchase your own home. Like any other forms of credit, mortgages require applicants to undergo a credit check before a decision is made, and no matter how much you are earning or how much you can cough up as a deposit, if your credit rating is on the floor, then your application will be, too. However, there are some ways to get around this and get a mortgage, even with a poor credit rating. Here’s how:
Improve Your Credit Rating
Although there are certain ways in which you could get a mortgage with your current credit rating, it’s important to understand that you may have to pay higher interest on your repayments for the full term as a result of this. In general, adverse credit mortgages are only offered by a handful of lenders, and most borrowers can expect to pay more in interest for the privilege. So, working to improve your credit rating immediately, perhaps by getting poor credit loans to consolidate your debt, will vastly improve your chances of being accepted for a mortgage.
Check Your Credit Report
Along with the obvious reason of determining what needs to be addressed in order to improve it, another big reason to check your credit report is so that you can find any possible discrepancies or errors. Errors on your credit file can significantly damage your credit rating, and it could be due to a simple error that you are unable to get a mortgage. However, even if you don’t find an error, it’s not all in vain – getting into a good habit of regularly checking up on your credit report will help you to better manage and repay your debt.
Try Bad Credit Mortgages
As mentioned above, there are a handful of lenders who provide mortgages to those with a bad credit rating. However, bear in mind that there are some drawbacks to getting a mortgage when your credit file is less than perfect. For example, adverse or bad credit mortgage lenders will usually require you to put down a higher deposit on your property, and you will definitely pay a higher interest rate. You may also need to undergo additional checks.
Be Sure Before You Apply
Before you finally apply for a mortgage, it’s essential to be as sure as possible that you will be accepted. In order to do this, speak to a financial advisor beforehand and mortgage advisors with the lender, and let them know your situation so that they can advise you on what you can expect. Showing a good, independent financial advisor your credit rating and asking for their honest opinion and advice is a good way to do this.
Having a bad credit rating can certainly make it much more difficult to borrow money. When it comes to buying your own home, taking out a mortgage is usually necessary. But, there’s no need for a bad credit score to stand between you and your new home!