Poor Credit Mortgage Lenders: How to Get Mortgage Refinance with Bad Credit

Poor credit mortgage lenders specialise in loans exclusively for the subprime credit market. This represents higher risk lending due to the borrower’s repayment history. Whilst mortgage refinance with bad credit used to be relatively easy to attain, the recent economic turmoil has changed all that.

Poor Credit Mortgage Lenders

Lending money to those with an adverse repayment history is a high risk/reward area. Although the default rate is considerably higher, it offers the provider the chance to charge more interest on the loan. Whilst mortgage companies for bad credit will still loan money, other criteria have been tightened.

FICO Credit Score

Failing to comply with the T&C’s of a credit agreement will be registered with the three major credit reference agencies (Experian, Equifax and TransUnion). The greater the credit transgression, the lower a FICO credit score will be. Chapter 7 bankruptcy and foreclosure are the most detrimental.

Correct Errors on Credit Reports

The Consumer Data Industry Association that as many as 3% of all credit reports contains errors. Whilst it isn’t possible to change the past, it is important to get any errors on a credit report corrected either personally or via an attorney. Free credit reports are available online for a 7 day trial.

House Deposits

Individuals who have adverse credit will normally be expected to provide a higher house deposit (about 25%) compared to those with a flawless repayment history. This will increase the likelihood of a poor credit mortgage lender approving the application as it protects them from default and negative equity.

Affordable Monthly Repayments

Particularly in the current economic climate, a lender will want to be certain that the borrower can afford the monthly repayments. Work out what is affordable when choosing to mortgage refinance with bad credit. Don’t apply for a loan that is likely to cause financial hardship further down-the-line.

Mortgage Brokers

Identifying poor credit mortgage lenders can be a difficult exercise so seeking professional assistance can be highly beneficial. A mortgage broker not only has experience and knowledge, they also have a number of useful industry contacts. They normally charge a fee equivalent to 1% of the loans value.

Mortgage Refinance with Bad Credit Vs Good Credit

Adverse credit borrowing is more expensive. After repayments have been made punctually for 2 years, consider refinancing. A low FICO credit score is not something that lasts forever and reliable payments will lead to a scores gradual improvement. This will make it possible to borrow more cheaply.

Poor credit mortgage lenders make home ownership possible. However, the cost of borrowing will be higher than on prime credit lending products. Don’t borrow more than is absolutely necessary and ensure that monthly repayments are affordable. Use either a mortgage broker or online price comparison site to ensure the most favorable deal is identified.