Having a bad credit record can be quite problematic in a number of ways. Not only do you face an uphill battle when trying to access credit, but it may take a number of years for you to repair the damage caused to your credit record.
Following the 2008 credit crunch, banks all over the world tightened their reins and introduced more stringent lending criteria. The rate of individuals qualifying for mortgages subsequently dropped.
It became increasingly challenging for individuals to qualify for mortgages- and that was for those with relatively good credit records. So what about individuals with bad credit records?
There are a number of bad credit mortgage loans options available.
If you have a bad credit record, you could consider looking at bad credit home loan private lenders. A new trend that is emerging is of individuals getting mortgage loans from a group of private investors. The basic requirement in this case is that you must own at least 65% equity in your home.
You may need to pay for higher mortgage insurance rates because of your poor credit ratings.
The advantages of this option include:
- No stringent requirements like banks
- There are no credit checks required
- There is no collateral required
There are also various lending institutions that specialise in providing access to bad credit mortgage loans.
If you use a good mortgage broker then they should be able to explain your situation to the lender. You need to be prepared to provide proof of income and assets and an explanation of your low credit score.
Tips for getting bad credit mortgage loans:
Start by getting your credit score. Check for any errors and make sure you contest any mistakes.
Keep in mind that your credit score is only one factor to qualifying for a mortgage.
Maintain a steady income.
Reduce or eliminate your debt.
Find a co-signer for the mortgage and make sure that you can afford it before applying.
Be prepared to pay more interest on your mortgage.