You want to get a mortgage, but your credit score took a nose dive after non-payment of bills due to unemployment, illness or some other misfortune. You’ve made few calls, checked with your bank, and you simply can’t get your foot in the door. So what are your options now? There are many mortgage lenders that offer bad credit mortgages in Bradford in situations where banks may say no to you.
Bad Credit Mortgage Bradford vs Traditional Mortgage
Bad credit mortgages come with higher interest rates than bank loans. It involves risk-based pricing and private lenders only consider the attributes of the property, rather than a person’s credit and other factors. The equity built up in the home and the location will determine the interest rates.
Why are Credit Scores Important?
Credit scores are used by the banks to assess the credit risk. It’s based on current credit history of a person. The credit score numbers are in the range of 350-900. The highest this number, the better it is for any borrower. This score is an indication whether a person will repay the loan amount or not. The score depends on many factors, such as: making late payments, non-payments, current debt amount, history of applying for the credit, actual credit history length, number of inquiries on the credit report, types of credit accounts, and so on.
Usually, banks prefer to give mortgages to borrowers with a score above 650. So if you have that kind of score, you can get an approval. You may also have to pay less interest. Scores above 600 but less than 650 also have a good chance for approval. In their case, creditors may require them to submit some additional documents before approving their loan amount.
All scores below 600 may be approved by our private lenders that specialise in providing bad credit mortgages.
Private Lender Mortgage Rates and Fees
Keep in mind that bad credit mortgages may cost you more than traditional mortgage refinance or home loans. If you have a low credit score, mortgage lenders may consider you a higher risk. They compensate it by charging you more for bad credit mortgage loans. So you may have to pay higher discount points, mortgage rates and lender fees.
How to Raise Your Credit Score
You can improve your credit score by:
- Having lower balance on credit cards
- Paying your bills on time
- Avoid opening credit cards that are not necessary
- If you own many credit cards, you should manage them well. In fact, few credit cards or instalment loans may raise your credit score.