How To Choose A Bad Credit Mortgage Company
If you have bad credit, then choosing a bad credit mortgage company could be one of the most important decisions you make. That’s because the bad credit mortgage company you select will represent the first step on the road to financial rehabilitation.
There are many reasons why people end up needing a bad credit mortgage company . Some people miss payments because of illness; some lose their jobs; some find that they are over-stretched financially because of rising interest rates. Occasionally, emergencies may require people to spend money they just don’t have, and with credit easily available there’s nothing to stop them. But it can all go wrong when there is no money to pay the bills, and many people end up needing a bad credit mortgage company after a history of disputes with utility companies, letters from creditors, arrears, defaults and County Court Judgements (CCJs). And all of these stay on the credit record, doing long term damage to people’s ability to get access to credit.
The choice of a bad credit mortgage company is crucial if people are to restore their credit rating so that they can have access to the full range of financial products available to UK consumers. When choosing a bad credit mortgage company there are two main issues to be considered – the interest rate and the redemption penalties.
Mortgages For Poor Credit
One reason why the interest rate is an important factor in selecting a bad credit mortgage company is that this will directly affect how much comes out of your pocket. A bad credit mortgage company will usually charge a premium for lending to someone with an adverse credit history. This is because there is perceived to be more risk that the person will not pay. The interest rate loading can be a couple of percentage points to as much as five per cent, though most people will want to keep the interest paid to the bad credit mortgage company as low as possible.
The rule of thumb with a bad credit mortgage company is that the less adverse your credit history, the lighter the loading. That means that if you have gone bankrupt or entered an individual voluntary arrangement (IVA) you will pay more for the loan from the bad credit mortgage company than someone with a couple of arrears.
Since most people plan to move onto a more favourable mortgage product as soon as they can, it makes sense to look at any early redemption charges imposed by the bad credit mortgage company. A bad credit mortgage company may well levy a charge if you repay the mortgage in full within a certain period, so it is in your interest to choose a bad credit mortgage company that has low (or no) early redemption charges.
An alternative to this is to choose an adverse credit mortgage company that has a credit repair product. This means that you may be able to switch to a more favourable interest rate at the end of a given period (usually two to three years) without incurring redemption penalties from the bad credit mortgage company.