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Mortgages for People With A Poor Credit History

If you're thinking of making an application for a mortgage, you know that this sort of thing is never as easy as you may have first thought, but if you have a poor credit history it's going to be impossible, right? Well, maybe not. This article takes an indepth look at what to do if this is you.

Author: Andy Silk

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So, you've decided that you need to take out a mortgage? The only problem is, you've got a poor credit history and you're worried that this might prevent you from applying. Well, the good news is that it won't. The great news is, that there are plenty of lenders willing to help and you may find that the interest rate they apply to your mortgage may not necessarily be affected.

Let's take a look at what a poor credit history actually is. In fact, it can be a very wide range of things, from arrears or defaults on your existing mortgage to a late payment on a store card and even bankruptcy.

Your Credit Record

Whenever you enter into a credit agreement, a record of this is created and your payment history can be viewed by any organisation proposing to lend you money in the future. They use it specifically to help them to make an informed and fair decision with regards to your latest application for credit, though not all of the information your credit report provides may need to be taken into account by the lender.

A mortgage is also known as a first charge. So called because in the event of you defaulting on payment and the property is repossessed, the proceeds of the sale will be divided amongst the creditors. The mortgage lender will get their money repaid first which is why they may decide that they can ignore certain areas of your credit history that may not affect the potential new mortgage or remortgage. Things like store card and catalogue repayments are sometimes ignored for the purposes of a mortgage application.

Since the 1980's, the amount of credit per person in the UK has increased enormously and if you believe all of the economic predictions, chances are it will continue to rise still further. With this increase, a great deal of people have fallen foul of circumstances which in many cases have been outside their direct control and have left them with a black mark on their credit history. In line with this growing number of people, lenders have created a whole new raft of financial products to attract would-be borrowers and to give them options that would not have otherwise been there.

Increased opportunity for the borrower also effectively means competition between the lenders and that in turn has kept interest rates down to a more than affordable level for many people.

So, What's Involved In A Mortgage Application?

If you're looking to apply for a mortgage or remortgage, it may only take you a few seconds with an online broker. You may get a decision in principle within a couple of hours and although you will need to complete a signed credit agreement, the whole process is relatively straightforward. The lender may need some or all of the following however:

- An independent valuation of the property

- Proof of ownership

- Proof of UK citizenship

- Searches - through a solicitor to look for things like proposed, local building works that may effect the value of the property in the future, old mine workings etc.

Your finance broker will have the tools and the know-how to take care of all of this for you, so you don't need to worry. They do an enormous amount of work behind the scenes on your behalf both internally and using external agents for specialist functions. Although this takes care of all the hard work, it may still take around 3 months to complete the whole process and for you to have the funds in place. Still, we've hopefully now put your mind at rest a little in terms of applying for a mortgage or a remortgage with a poor credit history.

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About Author

Andy Silk is FinanceGuru for http://www.FeelGoodLoans.co.uk . He has had many years experience at a senior level within the finance industry and has written extensively on all aspects of personal finance. For more articles by Andy Silk together with financial hints, tips and a wealth of internet resources, visit the Finance News section of the website.

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Mortgages for People With A Poor Credit History