Obtaining a mortgage with bad credit raises many questions in the best of times - this quick access 9 point guide will hopefully explain the top 9 questions asked when people obtain a mortgage with bad credit.
1. Can an adverse credit mortgage application guarantee I will get a mortgage?
A bad credit mortgage enables people to apply for mortgages and remortgages with adverse or bad credit being listed on the credit file. They can not guarantee a mortgage for everyone with impaired credit however they do make getting a mortgage with impaired credit more likely.
2. Do all adverse mortgage applications have loan companies fees?
A typical mortgage, an adverse credit mortgage or not will often have a lenders arrangement fee. Mortgages that allow adverse credit might have larger lender arrangement fees than a standard mortgage but that isn't always the case. Standard lenders arrangements fees have increased recently and nowadays there is little difference between the lending company arrangement fees charged between a normal and subwoofer prime lender.
3. Do sub prime lenders have higher rates of interest?
A sub prime mortgage lender will typically possess a higher interest rate than a standard high road bank or building society lender. The reason with this is simply to reflect the greater risk for that sub prime lender when lending to impaired credit score clients.
4. Will an adverse credit mortgage application take long to accomplish?
Not necessarily. Any lender will give a listing of documentation and information they require in order issue a home loan offer, such as ID, proof of residence, wage slips etc - the information a sub prime mortgage company asks for may be more in depth than the usual normal lender but if they receive the information on time there's no reason why an offer can not be issued just like quickly as a normal high street mortgage.
5. Will a detrimental mortgage application damage my credit?
When people obtain a mortgage, whether it be from a high street lender or perhaps a specialist sub prime or adverse credit lender they'll do a credit search. Your credit file will show that a mortgage lender applied for the visit a mortgage application - the credit file will not show recognise the business requested the search. With that in mind trying to get a mortgage with an adverse lender will be forget about harmful to your credit file than applying elsewhere.
6. Do all sub prime lenders charge for any MIG?
The simple answer is no. A MIG (or Mortgage Indemnity Guarantee) is definitely an insurance paid by the borrower to protect the lender should they need to repossess a property. The insurance will cover the lending company for any shortfall on repaying the mortgage when the property is sold (for instance, at auction) for under the monies secured against it. A MIG might be charged by any mortgage lender.
7. Will it cost more to leave a sub prime mortgage company?
Any mortgage with a special deal period (like a fixed or discounted interest rate period) will have penalties in place for borrowers who wish to redeem the mortgage whilst in the special offer period. This is because the lender has reduced the actual monies they will make on interest payment and to ensure the product they are selling is commercially viable they 'tie' people in before special deal period has ended. Once the deal period is finished it should cost no more to leave an expert lender than it does any other lender.
8. Can one use a 'normal' lender after being with a detrimental credit lender?
As long as you meet the high road lenders mortgage criteria there's no reason why you can't - the fact that you are already having a sub prime mortgage lender will have no effect on the new lenders decision - if you can meet their criteria everything should be good.
9. Do I need a mortgage broker to have an adverse credit mortgage application?
Normally yes, you will normally always need to utilize a mortgage broker to get a bad credit home loan. This is due to the fact that, to ensure that the lender to keep costs down for the borrower they don't employ the sales staff to deal with open public inquiries.
