There's no doubt that approaching a lender, knowing you have a less-than-perfect credit score, can be stressful, particularly if you're reliant on finding an affordable mortgage.
The reality is that there are thousands of UK bad credit lenders, and you're very likely to find a decent offer, but applying to the right mortgage provider is essential.
Today our mortgage brokers runs through the advantages of working with an experienced broker and why it's likely the most cost-effective option available.
Selecting a Bad Credit Mortgage Broker
Essentially, a broker acts as your advocate and a skilled expert guiding you through the mortgage market.
Without one, you're restricted to online mortgage calculators and price comparison sites, which reflect a tiny fraction of the available products.
Niche bad credit mortgage lender tend to charge slightly higher interest rates, but they can be invaluable if you can't secure a mortgage with a high street bank or your usual lender.
The other significant benefit is that a broker negotiates on your behalf.
Providing context about the reasons behind bad credit issues may be sufficient to satisfy the lender's eligibility requirements. For example, if they can see, there was a one-off situation (such as redundancy).
It is improbable you'd be able to negotiate a better rate or fees independently, without the backing of a broker to identify the most suitable lenders and put your case to their application panel.
How to Improve Your Bad Credit Mortgage Application
The first step to applying for a bad credit mortgage is to evaluate exactly the situation.
You need to know what lenders will see when they run a credit report, so you can either correct errors or remove outdated accounts from your history with the major credit bureaus.
We'd advise seeking a copy of your report with Experian, TransUnion and Equifax, as they all use slightly variable scoring metrics, and you can't be sure which agency your selected lender will use.
The next stages include:
● Repairing your credit score where possible. Steps such as registering to vote, closing accounts you're not using or bringing your debt below a certain percentage of the available facility can all make a marked impact.
● Saving as much deposit as possible. Larger deposits mean less lender risk and a greater chance of approval at a competitive interest rate.
● Looking at alternatives. Having a guarantor, augmenting your deposit with Help to Buy, or considering Shared Ownership could make it significantly easier to get onto the property ladder.
If you're concerned about your eligibility for a mortgage, Revolution Brokers can run through the options and help you assess which schemes may prove beneficial.
Why Avoiding Tentative Mortgage Applications is Advisable
Applying on the off chance you'll be accepted is rarely a move we'd recommend. The issue is that if you proceed through to a full assessment, a mortgage lender will run a hard credit check.
Anything that the lender didn't flag in the initial evaluation (to receive an agreement in principle) will be noted at this stage, so it's never the case that a lender won't notice late payments or defaults on your credit file.
Hard credit searches are recorded on your credit history and visible to anybody else running a check, so it can make it considerably harder if you build up numerous inquiries by putting applications in with several lenders.
How to Choose a Bad Credit Mortgage Broker
We appreciate that there are many brokers to choose from. Still, it is important to select your broker carefully, ensuring they have the expertise and knowledge to reach a successful outcome.
Things to look for include:
●Whole-of-market access. That means your broker can suggest any product from any lender they think is suitable - rather than selling products from a specific provider or picking from a limited list of products they are authorised to sell.
●Bad credit experience. Each application requires an appraisal of the circumstances before suggesting any mortgage solution. Brokers without an understanding of the bad credit lending market may recommend unsuitable products.
●Independence. An independent broker is essential. Brokers representing specific lenders cannot offer advice, even if they know a hugely more advantageous product is on the market.
Other factors include exclusivity. Many specialist lenders offer specific products and deals, available only to their approved brokers and unavailable to the general public.
That means a broker can normally find a far more competitive interest rate simply because they can apply for products that a private individual cannot.
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Expert Support Applying for a Bad Credit UK Mortgage
If you're trying to identify the best bad credit lenders or mortgage products, Revolution Brokers can help.
We understand that credit problems are common and leverage our years of experience to find excellent deals that help get you where you want to be.
Please get in touch on 0330 304 3040 or via email at info@revolutionbrokers.co.uk for an informal chat about the best options available.
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