What is a Bad Credit Mortgage?

A bad credit mortgage is designed to help you purchase the property you desire or refinance an existing home loan you may have or consolidate multiple debts, even if you have made mistakes in the past such as late mortgage or loan payments. Bad credit mortgages do not differ significantly from standard mortgages, apart from slightly higher interest rates.

Due to their ‘high-risk’ status, borrowers with blemishes on their credit history pay slightly higher rates, however, if you keep to the agreements of the loan and meet all the required mortgage repayments, after a set period your credit record will no longer be considered as adverse and you will be able to switch to a conventional home loan product.

By switching mortgage products to a standard mortgage, called re-mortgaging, you can enjoy significant savings using discounted interest rates.

Bad credit, whilst also known as adverse, poor credit, non status or sub prime, can mean a lot of trouble and frustration for those who suffer from it.

Unfortunately for borrowers with blemishes on their credit report, bad credit cannot be easily removed - unless it has been registered by mistake. Instead, by attaining a mortgage designed specifically for poor credit, sufferers can still purchase or refinance then work towards improving your credit history.

 

Does your Bank make you feel like a criminal??? At Mortgage Buddy we are are not here to judge or criticize you for any financial dilemma you may presently be facing or may have had in the past. We simply wish to assist you obtain the best finance solution for your unique situation.

You may not require a Bad Credit Mortgage!

As with most things, there are different degrees of bad credit. Lenders will look into your credit file and place a rating on how seriously your past will affect the chances of your mortgage application being accepted.

The amount, and severity, of arrears defaults and judgments contained within your file will determine which of the categories you are placed in, and therefore which type of mortgage you can apply for.

The categories, similar to school grades range from A+ to D. Having accrued minor debts, usually less than $1000 and telecom defaults, the lender may ignore these and you can get a conventional loan. Otherwise the lender may place you in the A+ category. Although the services of a sub prime lender may still be required, if you fall into one of these categories, you should have no problem finding a loan to suite your needs.

If, however, you have consistently failed to meet repayments on time, had your previous property repossessed or declared bankrupt, you will find yourself rated as D credit. If you are in this category may find it extremely difficult to get a mortgage of any sort and you will definitely pay a high rates of interest. Although you may pay a higher rate of interest, this type of loan could prevent you from losing your home through bank repossession and if you consolidate multiple debts, you could dramatically reduce your monthly repayments.

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