5 Myths Regarding Mortgages And Bad Credit Answered

It can be confusing to understand the world of mortgages. It doesn’t matter if you have poor credit. You can still apply to mortgages.

Let’s take an in-depth look at some myths that you may have heard.

Myth #1: Mortgage lenders won’t approve me due to my poor credit

Contrary to popular belief, there is no minimum score or ‘blacklist’ that you must have to apply for a mortgage. Each lender will look at your application and consider other factors. There are specialists who can provide mortgages to people with poor credit. An ‘adverse credit mortgage’ is available.

Poor credit can be caused by many factors. You may not be able to access specialist lenders because your mortgage rates for adverse credit might be higher. It is best to get advice from a broker, who will assess your personal circumstances and help you choose the right mortgage product.

Myth #2: My partner has bad credit, so I won’t get a mortgage

You might have heard the term “financial partnership”. The financial association is when you become financially related to someone via joint finances or joint credit accounts. Your credit report will reveal to whom you share financial resources. Your individual mortgage application will not be affected by your partner’s bad credit as long as they do not have any financial relationships with you.

There are lenders that will consider your application if you have a financial relationship with a partner with bad credit. This applies whether you’re looking to buy a home on your own or a joint mortgage. Myth #3: Having many applications will increase my chances to be accepted

The opposite is true. Every application you make to lenders will leave a mark on your credit report. If you submit multiple applications within a short time frame, it could appear that you are desperate for credit and less likely than others to repay your debts on time.

This could also negatively impact your credit rating. If you decide to approach other lenders, make sure you do your research and spread your applications. A lender may also issue a Decision in Principle, which states that they will lend you a specific amount in principle based on the information you provide.

Myth #4: My credit rating remains the same for my entire life

Credit history is just that, history. Your credit rating will improve if you make changes to your financial situation. You can fix bad credit ratings by taking a variety of steps, including getting on the electoral roll and closing any unused credit cards. To improve your credit score, click here and take action.

Myth #5 I will always be charged a high-interest rate for a ‘bad credit mortgage.

The myth that credit ratings don’t change has been debunked. Over the course of your life, your credit rating will fluctuate. You might have to pay a higher rate of interest in the short term, but if you have a good credit score, you may be able to get a better deal on your bad credit mortgage rates when you remortgage.

Remortgaging does not have to occur when your mortgage term ends. However, keep in mind that it is expensive and many lenders will charge early repayment fees. You need to weigh your options and consider all costs to reach the best financial decision.

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