Banks and building societies are careful who they lend money to (understandably!) and so you should be prepared to have your financial history carefully scrutinised during your property hunt.
Looking into your credit history will show up any defaulted payments and give the lender a good impression of how financially responsible you are with your spending. As well as looking at your credit report, lenders will also look at any County Court Judgements (CCJs) or bankruptcy proceedings that may be against your name.
If any of these apply to you, then you may find it harder to be accepted for a mortgage, however, there are certain lenders who will still lend to you.
Here’s a breakdown of what your options might look like on the market…
What’s my credit score like?
It’s always a good idea to know your credit score; this way you can better understand if and why there might be a reason for a refusal of your mortgage application. You can request to see your own credit rating from companies like…
As well as reviewing your credit score, these sites can provide simple ways for you to boost your score, such as registering on the electoral roll and being more vigilant with your details.
Mortgages with low credit ratings
If you do have a poor credit score, it’s more likely that the interest rate on your mortgage could be higher, in order to compensate the risk that the lender is taking. This will mean you’ll be facing higher monthly repayments.
If you want to bring these costs down, it may help to have a large deposit to put down upfront.
Other options available
If you’re struggling to get a deposit together, there are other options potentially available to you.
Help to Buy Shared Ownership
If you can find as little as 5% of the purchase share upfront for a deposit, then you can buy a share of the property (between 25% and 75% of the market value). You pay monthly rent on the remaining portion and can increase your ownership share as and when you can afford to do so.
The Bank of Mum and Dad
If you have a family member who owns a home and is willing to help you out, they can be named on your mortgage as a guarantor, and either:
Their home is used as security - your mortgage company would reclaim money from your guarantor or repossess their home if you failed to meet the repayments on your mortgage.
Or
Use their savings as security - your guarantor will put a lump sum into a savings account with the lender. This money will be unattainable until you have paid off a certain amount of money on your mortgage.
Getting tailored advice
Whether you have a poor credit rating or not, if you’re considering buying a property and want to know you’re getting the right mortgage for you and your family, you can speak with one of our mortgage advisers.
