Great Mortgage News For Those With Bad Credit Ratings
High Street lenders are now taking a far more relaxed view to granting mortgages to those with less than perfect credit ratings. This is great news because for so long people with bad credit ratings were either shown the door straight away or forced into paying scandalously high interest rates.
Credit Impaired Mortgages
'Credit Impaired Mortgages' are aimed at those who have previously defaulted on loan or credit agreements, have County Court Judgements (CCJs) against them or have previously been a bankrupt.
Most companies offering them do so on varying rates depending how bad your credit rating actually is, for example light, medium or heavily credit impaired. Industry experts suggest that somebody with a CCJ against them with no further debts would be classed as 'light'.
Use Specialist Mortgage Brokers
For those with a bad credit rating looking to get a mortgage then it's a very good idea to use a specialist mortgage broker who hopefully has experience of the market and can scan for the latest deals and offers.
However finding a good mortgage broker is often not that easy - Read these two articles for further information -
- Which! Says Watch Those Mortgage Advisors
- Why You Should Always Consider Using a Mortgage Broker
The advantages of using a mortgage broker especially for those with bad credit is that he most probably understands the market place far better than you do. However the problem lies with 'impartibility', will the broker actually give you good advice rather than suggesting the product that pays him the most commission.
This is a problem that most people have to go through but it is easy to avoid. Just go and talk to a few different brokers to get your own feel of the markets, services offered and especially fees charged.
Some brokers will try and stuff you up using the excuse that because you're credit impaired you'll have to always pay more, and while this is certainly the case with interest rates it's not always with fees/charged levied, so beware.
Of course the more you know about what you're buying and what type of fees should be charged the easier it will be to spot whether you're being taken for a ride.
Credit To The Banks
This website is often critical of the games that banks and other financial institutions plays but will always give credit where it's due. So well done to firms like Chelsea and the others who in our view are doing the definition of good business, ie where both sides get a fair deal.
Yes, the mortgage lenders are charging a higher interest rate because the clients with bad credit ratings are more of a risk, but then the clients themselves are also getting a fair deal especially if you look at the APRs which many of them were being forced to pay in the past, indeed if they could actually get a mortgage at all.
Further this , the banks are always open to negotiation over the long run as to refinancing the interest rate. For example, get a mortgage at a relatively high rate and after a year or two of paying the agreed amount every month on time your credit rating will naturally improve and you therefore have some basis for getting a lower rate.
Summary
Those with credit reference problems have really been taken advantage of over the years so it's excellent news that the mortgage lenders are looking at them in a different light. Sure, many of them only have themselves to blame for their past financial mistakes but then many have since worked hard to improve their credit rating, and deserve to be treated with more financial respect.
The important thing to note for the credit impaired is do your own research alongside visiting some mortgage brokers and lenders directly. The more work you do, the more you'll understand and the better financial deal you'll get.
Finally, as a rule of thumb try and do business with 'brand name' lenders such as Chelsea BS or Birmingham Midshires and not some back street operation that specialises in 'Adverse Credit' Mortgages. The back street firms are generally very expensive to deal with and will often suggest that they and their prices are the only option available to people with bad credit ratings. This now is certainly not the case.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.