As anyone who has got tangled up in the red tape of applying for a mortgage will testify, it can be a long and difficult process. And there’s an understatement and a half. Finding the right deal takes time. And there’s an understatement and three quarters. It can be even trickier if you’ve had bad credit in the past or have been previously declined. And there’s two understatements. Okay, we’ll stop now. Time to get serious.
Is there anything you can do to make it easier or getting accepted a little more likely? Well yes, there is, and these are those; our 7 IDEAL steps to getting a bad credit mortgage.
IDENTIFY THE ROOT OF YOUR BAD CREDIT
Before you even begin the process of application, it helps to understand what’s causing that bad credit of yours. Though it’s easy to slip into your overdraft, miss a mobile phone payment or get a parking ticket, unfortunately, all of these seemingly minor incidents can have a potential negative impact on your credit history.
While a credit report provides only a snapshot of your financial profile at a specific point in time, it is a useful way to get an overview of what some of the issues may be, whether that’s missed payments or something worse like CCJs (County Court Judgements).
There are a number of websites that let you check your credit history. Whichever one you go for, they all pull their information from the 3 main Credit Reference Agencies, – Callcredit, Equifax and Experian. The data used varies but the report will highlight any particular areas of concern, and your credit score will give you an idea of just how ‘poor’ your credit history is.
FIX THE FIXABLE
Once you’ve got your credit report, there are a few things that you can look at fixing immediately. You should, for example, check for any mistakes on your credit report as a matter of priority. If you find any, ask the relevant credit agency to check their records and correct errors. Settle any CCJs, as these will then be marked as satisfied. Your credit report will also record your electoral details. So, if you notice that you’re not on the electoral register, make sure you get that sorted.
Going forward, and once you’re in the spirit of better habits, do your best to adopt a more mindful approach to money management to avoid further issues down the line.
AVOID FURTHER RED FLAGS
There are certain behaviours that are like a red flag to lenders. Channel the energy of a skilled matador, and avoid anything that will make them uneasy. A particular cause for concern for lenders is payday loans, so if you’re worried about your mortgage application being successful, don’t even consider this type of loan.
SPEAK TO A MORTGAGE PROFESSIONAL
Not all mortgage brokers were created equal, so using a specialist bad credit mortgage broker to handle your bad credit mortgage application is the easiest way to help things go as smoothly as possible. Not only will a specialist adverse broker have access to a wide range of mortgage products, especially if you use a whole-of-market broker, but they’ll also know what particular lenders are looking for. This helps ensure that your application is made to a lender that will be more likely to approve you for a deal.
Of course, using a broker also means that you don’t have to do all the legwork associated with trying to find a great mortgage deal. Fees can be high, but when options are limited, it’s certainly worth considering.
OFFER A LARGER DEPOSIT
Easier said than done, we know; that’s why you’re here after all. But, if you are able to get some funds together to increase the amount of mortgage deposit available to you, then this will improve the deals that are available to you immensely. Simply put, the greater the amount of your deposit, the less you’ll need to borrow.
It’s useful to be aware of Government Help to Buy schemes like the Help to Buy ISA, Shared Ownership or Equity Loans. Do your homework and get saving, as moving from a 10% to 15% deposit can make a huge difference to your chances of getting a mortgage.
GET ON TOP OF THOSE FINANCES
If you’re considering applying for a bad credit mortgage, then it’s crucial to be extra vigilant in the run up to making that application about staying on top of things such as credit card and loan repayments. This will help to ensure that you don’t add any more negative entries to your credit file.
ACCURATELY REPRESENT YOUR INCOME
If you’re an employee, mortgage lenders will want you to provide proof of your income via payslips. When you’re gathering all of your supporting documents together, make sure that you have payslips for the correct period. More and more employees no longer receive paper payslips; if this is you, then make sure that you know how to access and download electronic documentation.
For the self-employed, the process of proving your income can be trickier. Again, a specialist broker is a great resource for giving you advice on what a lender will want to see. They’ll also be able to help anyone with an irregular income, for example if you’re a consultant, do a lot of overtime or receive bonuses. The more you can demonstrate to a lender that your income is sufficient to meet any repayments, and is relatively stable, the easier you will find the application process.
And with that, we bid you adieu. Just remember to invite us round to your housewarming party once you’re installed, yeah?
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