If you have bad credit, getting approved for a mortgage can be a challenge. Lenders are typically more hesitant to lend to borrowers with a low credit score, as it can be a sign of financial instability or a lack of creditworthiness. However, a mortgage broker may be able to help you navigate the process and increase your chances of getting approved for a mortgage.
What is a mortgage broker?
A mortgage broker is a professional who helps borrowers find and secure a mortgage. They work with a variety of lenders and can help you compare rates, terms, and other features of different mortgage products to find the one that best meets your needs.
Things to consider when working with a mortgage broker
While a mortgage broker can be a helpful resource when you have bad credit, there are a few things you should consider when working with one:
- Make sure they are Financial Conduct Authority (FCA) registered: It’s important to make sure that your mortgage broker is regulated and qualified to provide mortgage services. You can use the FCA’s Financial Services Register to check.
- Understand the fees: Some mortgage brokers charge fees for their services. Make sure you understand what these fees are and how they will be charged before agreeing to work with a mortgage broker. It is the mortgage broker’s responsibility to disclose this during your first meeting.
- Read the fine print: Before agreeing to a mortgage, make sure you understand all of the terms and conditions. This includes the interest rate, repayment schedule, and any fees or penalties.
What can a mortgage broker do to help with bad credit?
There are a few things that a mortgage broker can do to help you if you have bad credit:
- Explore different mortgage options: A mortgage broker can help you compare different mortgage products and determine which one is the best fit for your situation.
- Connect you with lenders who specialise in bad credit mortgages: Some lenders specialise in working with borrowers who have bad credit. A mortgage broker can help you connect with these lenders and explore the options that are available to you.
- Help you improve your credit score: A mortgage broker can help you understand what factors are affecting your credit score and provide guidance on how to improve it. This can include paying off outstanding debts, disputing errors on your credit report, and establishing a positive credit history.
What else can you do to increase your chances of getting a mortgage with bad credit?
In addition to working with a mortgage broker, there are a few things you can do to increase your chances of getting a mortgage with bad credit:
- Save for a larger deposit: A larger deposit can help you get approved for a mortgage, despite having bad credit. By putting down a larger deposit, you’ll be able to show lenders that you have the financial resources to make your mortgage payments and it also reduces their risk.
- Consider a joint application: If you can’t get approved for a mortgage on your own, applying in joint names with someone with a higher credit rating than you, can help increase your overall credit score. There is a risk involved for the joint applicant though, as this will create a financial association between the two of you.
Conclusion
If you have bad credit and are struggling to get approved for a mortgage, a mortgage broker may be able to help. They can help you understand your credit report, find a lender that specializes in bad credit mortgages, and provide guidance on how to improve your credit score.
However, it is important to understand that getting approved for a mortgage with bad credit will be more difficult and may come with higher interest rates.
You can find mortgage brokers specialising in bad credit in our mortgage adviser directory.
