Don’t Make These Errors!
Securing a mortgage with bad credit can be challenging, but it isn’t impossible! As long as you don’t make some of these rookie errors and work with a trusted bad credit mortgage broker, you have a really good chance. So, here’s what not to do.
Not Checking Your Credit Report in Advance
Before you do anything else, you must review your credit report. Errors or outdated information can lower your credit score and affect what kind of mortgage you can get. So, get a copy of your credit report and check for inaccuracies. If there are any, dispute them right away to ensure that everything is accurate. This can make a world of difference.
Not Improving Your Credit Score First
Improving your score even slightly can really help your chances of getting approved, so don’t rush into applying right away. We know that you can’t get rid of bad credit overnight but doing things like paying off those high-interest credit card balances and avoiding taking on any new debt or making multiple credit inquiries all help. If possible, give it a few months for your changes to take effect.
Not Saving Enough for a Deposit
A larger deposit can really reduce the risk of lending to someone with less-than-ideal credit, improving your chances of approval. So, aim to save as much as possible – 20% would be great! Every little bit you can contribute to your deposit pot will help, so don’t worry that your small steps won’t amount to much.
Choosing the Wrong Lender
Not all lenders are created equal, and some may take advantage of borrowers with bad credit by offering really unfavourable terms. Applying to the wrong lender can result in unnecessary rejections or committing to a mortgage with excessive fees and rates. So, do your research and find lenders who specialise in bad credit mortgages – and take note of the next tip!
Skipping the Services of a Mortgage Broker
One of the biggest mistakes you can make is attempting to navigate the process without any professional support. A great mortgage broker will have relationships with a wide range of lenders, including those who are open to dealing with bad credit borrowers. They’ll be on hand to explain complex jargon, and they will negotiate on your behalf to secure better rates and terms.
Applying for Multiple Mortgages Simultaneously
Submitting several mortgage applications within a short period can harm your credit score – something you really don’t want to damage even further! Why is this? Well, each application triggers a hard inquiry, which doesn’t look great to lenders. That’s why you should work with a broker to identify the most suitable lender before applying.
What Next?
Applying for a bad credit mortgage requires some extra effort, but that doesn’t mean you should give up before you’ve even begun! With the right planning and support, your dream of owning your own home could be within reach.
