Financial Planning and Analysis

How To Get a Mortgage with Bad Credit 

09-23-2020 10:05 AM

Most people want to get on the property ladder and buy a home of their own, but it isn’t always easy. If you’ll need a mortgage to purchase a property, you’ll be required to save a deposit and get approval from a lender. If you have a bad credit history or a low credit score, however, you might be worried about whether you’ll be accepted by a mortgage company.

Fortunately, bad credit doesn’t have to stop you from buying your dream home. No matter what your financial situation, you can take steps to get on the property ladder now. To find out how to get a mortgage with bad credit, take a look at these top tips now:

1. Lower Your Debts

If you have outstanding debts, you’ll want to lower them as much as you can before you apply for a mortgage. However, be wary of closing credit accounts, such as credit cards, as this can actually lower your credit score. By leaving them open and either not using them or paying the balance off in full every month, you can improve your credit score surprisingly quickly.

While you don’t need to be debt-free in order to obtain a mortgage, maxing out your borrowing limit won’t make you an attractive applicant in the eyes of mortgage providers. By reducing the amount you owe, you could increase the likelihood of being approved for a mortgage.

2. Consult a Broker

Instead of going directly to mortgage lenders, meeting with a broker could enable you to access the help you need. When you seek advice from mortgage loan experts, Mortgage Goat, for example, they’ll scour more than 130 lenders to find the best option for you. An experienced mortgage broker will have worked with clients in all sorts of situations, so they can be a great way to access low rates and specialist mortgages for people with bad credit histories.

3. Find Out If You Qualify for Help

There are many programs designed to help people get on the property ladder, so you may be able to access reduced interest rates or minimal deposit requirements. With an FHA mortgage, you may only need to put down a deposit of 3.5% of the purchase value, for example. Alternatively, USDA and VA mortgages have zero deposit options which could help you to buy a home.

In addition to this, there are thousands of schemes which offer grants and low-cost loans to people who are struggling to finance housing. If you qualify, this could help you to get out of debt more quickly and secure a mortgage instead.

Take Control of Your Finances

Before you begin the mortgage application process, be sure to familiarize yourself with your finances. Check your credit score and ensure that all the information contained in your credit history is accurate. If not, you should be able to get it modified or removed. Once you have all the information you need, you’ll be ready to get the specialist help you need from finance professionals.

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