Best Mortgage Deals
Advice, help, information and guidance on the best mortgage deals available

Best Mortgage Deals - Poor Credit Mortgages

best mortgage deals by AnnaWe all have periods where our credit history suffers, and it can be hard to find the best mortgage deals when this happens. But don't give up - even in today's tough market there are lenders willing to provide mortgages but it is much harder to find the best deals. So where do you start in one of the toughest markets right now?

Best Mortgage Deals - Your Credit History

The first thing I would do is to find out what my credit profile looks like, which may give you some clues as to the problems lenders have in providing you with a mortgage deal. Personally I would recommend Experian who provide an online credit report which is free on a thirty day trial basis. You can also sign up on an annual basis with monthly reports and notification when your credit history is being checked. The report will highlight any issues, which may or may not have been resolved, and this gives you a view of what the lender will see when they check your status, so it is well worth having. If you have CCJ's or other judgements, make sure that these are correct. Moving house regularly can often leave a trail of bad debt which may not be yours, but perhaps relates to a previous tenant or owner. Even quite trivial amounts can find their way onto your credit history, so please do check it carefully. To improve your credit score, make regular payments to your credit and store cards - this will show that cards are managed carefully. You don't have to pay the maximum, just regular amounts. Finally, make sure the history is up to date with no errors, and if there are any obvious problems, make the lender aware with the reasons - don't try to cover them up as they will find out in the credit checking process anyway. Below are the top six credit score killers!

Description Action
Not on the electoral roll You will almost certainly be rejected - talk to the local authority
Poor credit history 35% of your credit score is about credit history. CCJ's and other negative judgments will remain on your score for 6 years. Missed or late payments can be generally be repaired or improved in 12 months
Current address If you have been at the same address for 3 years or more this is positive and will score well. Less than this will reduce your score, and multiple addresses is not a good sign. Try to stay at one address for at least 12 months to start to repair
Employment Having several jobs in a 3 year period can be damaging to your score. Try to maintain a period of continuous employment with the same employer for as long as possible. More than 3 jobs in 3 years will adversely affect your score.
Bank Account No account, or a new account will affect your score. Lenders look for accounts that have been open for some time. If you don't have an account make sure you open one and start to build a history with the same bank.
Credit applications Making multiple credit applications will raise a red flag on your credit history. Each time you make an application it will be recorded on your credit history. One or two a month is fine - more than this, and particularly if you have been declined, then you should stop for about 6 months, and let the credit report stabilise again.

Best Mortgage Deals - Credit Scores Explained

Your credit score will be based on something called the FICO score, which stands for Fair, Isaac and Co. the Californian company that developed the scoring system. Scores range from 0 to 1000, with people falling between the 300's and the 900's. The average for most people is 600 to 700, and the higher the score then the better the credit rating. Age will always play a part, so the older you are then the more this will help with your score.

Best Mortgage Deals - Finding A Poor Credit Mortgage

I cannot stress enough that the first stage is to check your credit history, and then repair it where possible. Start with the list above and make sure that these are not the reasons for a poor score. Bad credit mortgages, although not the best option, will help you rebuild your credit quickly. If you are going to apply for a bad credit mortgage, you'll need several pieces of information before you proceed. First of all, make sure your credit report and score are accurate. If removing old or closed accounts or removing something that is incorrect from your credit report can improve your score, even slightly, it is worth the effort. Next, you'll need data on your income including pay stubs, deposit slips and tax returns if appropriate. Bad credit mortgage loans will often hinge on your proof of steady income. Finally, you'll have strict repayment guidelines. Make sure you can make the payments on time and in full. Don't get in over your head and make your bad credit situation even worse.

In looking for the best deals on a mortgage, make sure you understand the penalties and pitfalls. These types of mortgages are notorious for huge penalties and the interest rates will vary enormously, and can be as much as 3% more than an average standard variable rate mortgage. Credit rating is everything in this market. If you have CCJ's or are a discharged bankrupt them you will be sold a much 'heavier' version, than if you simply have some missed payments on a mortgage, loan or credit card. In this case the interest rates and terms will be less onerous. So please - start with your credit history, and then start looking for the best mortgage deals - not the other way round.

Now let's look at mortgages available for those of you with savings, or cash in the bank and the types of best mortgage deals available for you.

Best Mortgage Deals - next page