Why Having Bad Credit Doesn’t Have to Stop You From Getting Your Dream Home

Written by Posted On Wednesday, 21 November 2018 05:28

Everyone makes financial mistakes once in a while, and the majority of us will have one or two missed payments on our credit report that we really wish weren’t there.

Should this stop us from getting the family home from real estate in senegal we deserve? No - and it doesn’t have to.

It’s true that lenders will look at your credit score when deciding whether or not to offer you a loan or mortgage, but it’s not the only thing they look at. This means that even if you’ve got a poor credit score, it’s still possible to find a mortgage that works for you.

If you’ve been denied a mortgage in the past, don’t give up just yet. Follow the 5 tips below and you may still be able to get a loan for that dream home you’re looking for.

Tip #1: Save Up for a Higher Deposit/Down-Payment

The higher the amount you can pay up front, the less you’ll have to borrow from your mortgage lender. Having a higher deposit also makes you look more attractive to lenders and goes a long way towards proving financial security.

In the UK, it’s typical for first-time home-buyers to save up and pay around 10% of the cost of their home as a deposit. Therefore, you can set yourself apart from the crowd and be more attractive to lenders if you can save double that. Aim for 20% if possible.

Tip #2: Go Through Your Credit Score with a Fine-tooth Comb

You might think you have a bad credit score, but in reality, the score might not be a true reflection of your credit history. It’s not all that uncommon for mistakes to show up on your report by accident.

Go through it carefully and, if there’s anything on there you don’t remember or feel is inaccurate, call the credit bureau and dispute it. This could increase your credit score and make you more attractive to lenders.

Tip #3: Use a Guarantor/Co-signer

A guarantor is someone who agrees to repay the loan/mortgage payments due for you if you were to default on your payments. If their credit score is good, lenders who might have been out of reach might consider lending to you on the strength of their credit score instead. It’s important to remember that you should only use a guarantor if you’re certain you won’t ever need to default on payments.

Tip #4: Look for the Right Lender

The biggest, most-common lenders out there might have strict eligibility criteria and policies regarding credit scores. However, there’s a much larger pool of lenders out there that you might not be aware of and which might be more willing to offer loans and mortgages to customers with bad credit.

To access a larger pool of lenders, you might need to go through specialist bad credit mortgage brokers like 1st-UK.

Tip #5: Opt for a Short Tenure

The shorter the tenure, the quicker the mortgage lender will be repaid in full. Therefore, lenders often prefer those who opt for a short tenure. It also shows your confident about your financial position and will help you to secure lower interest rates and save money in the long run.

Because of all of the above, if you can afford the higher monthly repayments, it’s usually better to go for a short tenure.

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