How to Get A Mortgage with Bad Credit: A Guide

Are you hoping to get your foot onto the property ladder? Have you struggled financially in the past? Do you currently find yourself with a low credit score?

Although reports suggest that half of Brits have not checked their credit score once in their life, those will likely be concerned that their bad credit score will prevent them from qualifying for obtaining a mortgage.

Fortunately for them, it is possible to get a mortgage despite having bad credit. If you are unsure about getting a mortgage with bad credit, read on to find out how.

Pay Bills On Time

Being late for payments is a simple way to cause a person to have bad credit. One thing lenders will always look at is your credit score. They will check it to see if you are reliable. Not paying bills on time and being late can potentially prevent them from agreeing to provide you with the mortgage you wanted.

Paying bills on time will show lenders that you are reliable. Creating a direct debit is an easy way to help ensure that a monthly payment is not missed.

It allows for payments to be made automatically and reduces the risk of missed payments. Creating this healthy habit of paying bills on time will be beneficial. It will help you stay organised with your finances and helps you to increase your chances of obtaining a mortgage.

Choice Of Provider

Obtaining a mortgage is one of the essential steps in the house buying process. Each lender will have requirements that need to be met by the person wanting to get a mortgage. One thing that can turn some providers away is bad credit.

Fortunately, there are many providers, such as MoneyNest, who do offer support and provide mortgages to those who have bad credit. Consider speaking with the experts from these businesses to find out more and see what options are available to you.

Be Alert On Mistakes

Another way to further help increase your chances of getting a mortgage with bad credit is by being alert to any mistakes in your credit score. As you prepare to apply for a mortgage, carefully look at your credit score. Spend time looking for errors or fraudulent activity, which can impact your credit score.

If any issues were identified, they could be investigated and resolved before submitting your mortgage application. Ensuring that there are no errors that could affect your credit score can help increase your chances of being successful with your application. Like paying bills on time, it shows lenders that you are well aware of your financials and are actively checking to ensure they are the best they can be.

Aim To Eliminate Debt

One way to help you get a mortgage despite being on bad credit is by reducing or eliminating any debt you have. Reducing your debt is achievable if you have a good income. It is common for many individuals in today’s society to have some form of debt. It could be from overdue credit card payments or student loans. These types of debts can impact a person’s credit scores.

To help increase the chances of obtaining a mortgage loan, try to reduce your existing debt. Decide on how much of your monthly income can be put towards clearing any debt you have. When mortgage providers look at your application, they will see the conscious effort you are making to reduce the debt you owe. Seeing this can help your case, making mortgage providers more likely to approve your application. Aim to clear the debts that you can pay off in full first.

Be Prepared To Explain Bad Credit

Understandably, any mortgage loan provider will be curious about the reasoning for your bad credit. It can cause concern as they will want to offer a loan to those that they believe have the capabilities of paying it back.

One way to overcome this issue is by speaking with your bank and explaining the causes behind low credit. Ensure these low ratings are in the past and you are making an effort to amend them. You can show them this by providing evidence of paying bills on time. Being open about your credit history and showing that you are actively resolving the issue can help with increasing the chances of obtaining a loan. Mortgage providers are more likely to approve applications if the person can show they can meet payments.

In Summary

The bottom line is that a person with bad credit can get a mortgage. It might be more challenging, and it will likely take longer, but it is possible. Some providers will offer you a mortgage to help you get onto the property ladder. Keep these tips in mind when you begin trying to obtain a mortgage, despite having bad credit.