Poor Credit Mortgage Lenders

How to Get Mortgage Refinance with Bad Credit

Oct 9, 2009
Asa Ghaffar

How to Get a Mortgage with Bad Poor Credit - leszaho

If you're finding it difficult to get approval for a home mortgage due to past credit problems, you need to speak to a specialist mortgage lender for poor credit.

Poor credit mortgage lenders specialise in loans exclusively for the subprime credit market. This represents a higher risk due to the borrower's repayment history. Whilst mortgage refinancing with bad credit used to be relatively easy to achieve, the recent economic turmoil has changed matters.

Lending money to people with an adverse repayment history is a high risk niche. Although the default rate is considerably higher, it offers the provider the chance to charge you more interest. Whilst mortgage companies will still lend money, many of the other criteria have been tightened.

FICO Credit Score

Failing to comply with the terms of your credit agreement will be recorded by the three major credit reference agencies - Experian, Equifax and TransUnion. The bigger the transgression, the more your FICO credit score will fall. Declaring bankruptcy and repossession are the most detrimental.

The Consumer Data Industry Association believe that as many as 3% of all credit reports contains errors. Whilst it isn't possible to change the past, it's important to get any errors corrected - either personally or through an attorney. Free credit reports are available online for a 7-day trial.

Adverse credit means that borrowing money is more expensive. After repayments have been made punctually for 2 years, consider refinancing. A low FICO credit score is not something that lasts forever and reliable payments will lead to a scores gradual improvement.

Poor credit mortgage lenders make home ownership a reality. However, the cost of borrowing will be higher than it is on prime-credit products. Don't borrow more than is necessary, and ensure that monthly repayments are affordable.

Rasing a House Deposits

Individuals who have adverse credit will normally be expected to provide a higher house deposit than people with a flawless repayment history. This will increase the likelihood of the lender approving your application because it protects them from default and negative equity.

You're going to need about a 25% down payment, and this can be difficult to raise. This is particularly true if you're having to pay a rent to a landlord each month. You'll either need to set aside some money each month or ask a member of your family whether they're able to help you.

Affordable Monthly Repayments

Particularly in the current economic climate, the lender will want to be certain that the borrower can afford the repayments. Work out what is affordable when choosing to mortgage refinance with bad credit. Don't apply for a loan that's likely to cause financial hardship at a later date.

Identifying specialist lenders can be a difficult exercise, so seek professional advice. A mortgage broker not only has experience and expertise, they also have a number of useful industry contacts. A broker will normally charge a fee equivalent to up to 1% of the loan's value.