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How Difficult Is It To Get a UK Mortgage If You Have A Low Credit Rating? A lot of people will face credit difficulties during some period in their life. In fact, last year, mortgages for people with a bad credit history represented around 14% of all UK mortgages. This proportion gets higher each year. There are a lot of reasons people have a poor credit score. Too often, the person is plainly the victim of bad luck. Common circumstances may include A Death in the Family, Poor Health, Separation, Redundancy or Bankruptcy. Any one of these situations may cause homeowners to fall behind with their mortgage. Indicators that you're likely to have a bad credit record are: You've been declared bankrupt. You have entered into debt agreement. You have one or more court judgments against you. You have been in deficiency with a past home or other bank loan. In the past, having poor credit could really limit your chances of getting a mortgage. It was likely that you would need to speak to a mortgage lender specialist with a higher interest rate than normal borrowers. Today, Mortgage Lenders in the UK are becoming more understanding to potential homeowners with less than perfect credit histories. They are more interested compared to the past in finding those who are generally trustworthy borrowers but had just a little bad luck. Many standard lenders now provide home loans for people with a poor credit history. In the last few years, the range of UK mortgage deals from mainstream banks and building societies has grown remarkably. The increase in competition simply means that deals being offered to poor credit borrowers are better. There's more favourable terms and lower rates. One of the advantages of borrowing from these types of lenders is that they usually offer you the opportunity to switch to one of their best mortgage rates in the next two or three years - as long as you have been making your payments on time. In fact, people with only slightly poor credit ratings will realize that the rates they are offered are less than 1% higher than the lender's normal variable interest rate. Sometimes they find that they qualify for the same uk mortgage deals being offered to mainstream borrowers. For people who've got terrible credit, what tends to happen is, the worse the credit history is, the higher the interest rate charged. At the high end of the scale, recently discharged bankruptcies and others with other major credit issues will pay interest rates up to 11%. These rates don't pertain to most people, so don't let this turn you away. If you have ended up with a poor credit history, better your situation by making responsible payments on any financial loan you have. The mortgage lenders simply want to see regular continuous payments. It's not the amounts. It's the regularity they are seeking. In addition to a good annual income, this can really help better your credit score. Those two things are the main ways that those with positive credit ratings got those ratings. Mainstream borrowers can now expect a variety of choices in UK mortgages: trackers, fixed mortgages, variable mortgages the list doesn't end there. The best part is that a good share of these are currently accessible with poor credit rating mortgages. Many lenders who deal with the bad credit cases now offer equivalent choices to those offered in the mainstream mortgage market. Two year fixed rate mortgages are becoming more popular because of the security they give. Even if rates vary, payments on a fixed mortgage remain the same each month. To find the best deal on your mortgage, it's worth it to get advice from an expert when considering a remortgage or credit mortgage. Make sure you consider consulting a bad credit mortgage specialist, who can look over a greater selection of mortgages for you. Look around to get the package that fits your needs. Just as long as your financial situation is under control now and you've payed all the legal commitments concerning your past debts, you'll have a decent chance of getting a remortgage or mortgage loan. Brian Harbinson regularly contributes to MortgageSorter, a UK website that specialises in mortgages for those with bad credit histories.
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