What is it like finding a mortgage if you have a bad credit rating?

by Louise Martinson

debt management
L­eeeee asked:


Im o­n­ a de­b­t man­age­me­n­t pl­an­ with­ th­e­ CCCS­ fo­r­ a s­mal­l­ amo­un­t o­f de­b­t i wo­r­ke­d up wh­e­n­ i fir­s­t tur­n­e­d 18, s­in­ce­ th­e­n­ my fin­an­ce­s­ h­av­e­ b­e­e­n­ go­o­d h­o­we­v­e­r­ im awar­e­ my cr­e­dit r­atin­g is­ b­ad.

Me­ an­d th­e­ gir­l­fr­ie­n­d ar­e­ l­o­o­o­kin­g to­ ge­t a mo­r­tgage­ o­n­ a fl­at s­o­o­n­ an­d wan­te­d to­ kn­o­w if we­ e­v­e­n­ s­to­o­d a ch­an­ce­?

Wh­at do­ yo­u s­ay to­ th­e­ mo­r­tgage­ b­r­o­ke­r­? O­n­e­ wo­ul­d th­in­k th­at it wo­ul­dn­t make­ an­y diffe­r­e­n­ce­ to­ th­e­m an­y way b­e­caus­e­ if we­ co­cke­d up o­ur­ mo­r­tgage­ r­e­payme­n­ts­ th­e­y can­ jus­t e­v­ict us­ an­d s­e­l­l­ it o­n­ to­ s­o­me­o­n­e­ e­l­s­e­ can­t th­e­y?

An­y adv­ice­ wo­ul­d b­e­ much­l­y appr­e­ciate­d th­an­k yo­u v­e­r­y much­.

L­e­e­
We­ ar­e­ in­ th­e­ UK s­o­ pl­e­as­e­ b­e­ar­ th­at in­ min­d wh­e­n­ an­s­we­r­in­g. Th­an­ks­

h­ttp://w­w­w­.lou­isema­rtin­­son­­.co.u­k

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{ 7 comments… read them below or add one }

1

amy s 09.07.08 at 8:50 pm

If you fico scores are low i HIGHLY suggest going to a broker who specializes in FHA loans. FHA programs are based on your income rather than your fico scores, and would give you a rate around 6-6.875

FHA would allow you to also purchase a home at 100% with up to a 5% seller concession.

Good luck buying!

2

MoneyMonkey 09.08.08 at 6:02 pm

I just saw a report on CNBC this morning (online news) that Countrywide, the largest mortgage servicer had ZERO subprime loans last month.

The lender does not want to end up owning your property if they have to foreclose on you. They are doing that enough now and it is very costly to the company.

Having a 20% down payment will help you a lot, or waiting until you are out of debt and have a better credit rating is by far the best solution for you.

Good luck, and be patient.

3

Othniel 09.08.08 at 6:38 pm

It sounds like you should think of renting first. Once you are renting then start on building up your credit rating. A low credit score will affect your ability to get a loan and if you get one it will be at a higher interest rate.

You neglected to say if you have money for a down payment. I never advise unmarried people to purchase real estate. It gets very complicated especially if the relationship runs into difficulty.

Lenders have a ton of people facing foreclosure and they are more interested in borrowers who have assets, income and good credit.

4

wilfred b 09.12.08 at 12:43 am

you wont have much problem at all but you will require a deposit keep away from mortgage brokers until you have tried the banks yourself or get a broker that gets the fees paid by the bank or loan company most are only after big fat fees that can be obtained for doing virtually nothing

5

leambi 09.13.08 at 9:47 pm

Hi, you need to save up as much as you can for a deposit, preferably at least 10%, tell the mortgage broker what debts that you have and what you may have registered against you so they arent wasting time trying to get you placed with a lender that isnt suitable (bear in mind that they arent bothered what you have, they deal with this type of thing every day). A reputable mortgage broker will only charge you a fee for getting a mortgage offer in place and that fee will not be payable until you complete so there is no harm in giving a couple of brokers a ring (just remember that you do not have to pay them anything up front and nothing at all if you dont complete).

6

CATHERINE M 09.15.08 at 10:37 pm

I wish my experience is helpful for you.Here is the good resource.

7

Sarah W 09.17.08 at 9:36 pm

There are lenders out there that will be willing to lend to you but they will want you to have a deposit due to the credit history. Try to save at least 10%.

Go to an independent mortgage broker who will be able to lok at the whole of the market and will be able to tell you who can and cannot lend to you. Although you could go round all the banks, it would take you forever and you would then need to compare any deals they were able to offer you including all the small print. An independent adviser will do all this for you and some have very low or even no fees payable by you as they work on commission. Also many of the lenders who will lend where there have been credit issues are not on the high street but more specialist lenders who do not offer mortgages direct to the public so you will get a wider choice.

When you see the adviser you should tell them the full details of your past problems and be totally honest. This way they will be able to get you the best deal.

Good luck and if you need any more help let me know.