A lot of borrowers don’t have full knowledge of what a bad credit mortgage is all about. However, a bad credit mortgage is like your regular mortgage, but it often has a high interest.
Also, the limit a borrower can get is often reduced because they have a bad credit score. In addition, if you have a bad credit score, you may be asked to provide a larger deposit of up 20 to 25 percent of the value of the property.
On the other hand, if you have good credit, your deposit may not exceed 10 to 15 percent of the value of the property.
Why does a bad credit score attract more interest rates?
Generally, borrowers with a lower credit score are viewed as high risk by most lenders. Assuming you have a good credit score, your chances of getting your loans approved with a fair interest rate are higher. These days, lenders often have a calculator on their website that helps borrowers know how much they can get based on their credit score. For instance, MortgageKey can help you calculate and proffer a loan that will suit your credit score.
What can I do to get a mortgage with a bad credit score?
We have stated clearly that you can get a loan with bad credit. Nevertheless, there are a few things you can do to get a loan despite having a bad credit score.
Show lenders you are responsible
One way you can show lenders you are responsible is to pay your utility bills on time. Delaying the payment of your utility bills will put you in a bad light before credit. Also, you are encouraged to pay your utility bills in full if you can.
Review credit report
Find time to check your credit report regularly and make sure it is up to date. Also, you need to ensure that the details on your credit report are accurate. Assuming you find anything that is not consistent with your record, reach out to make sure it is corrected. If there are reasons why your credit score went down, you can also provide a note for lenders to see too.
You also need a responsible guarantor to boost your chances of getting a mortgage with bad credit. When you provide a reliable guarantor, it reassures the lenders that you will make your monthly payments. A responsible guarantor will increase the trust lenders have in you. Don’t use a guarantor with bad credit because the lender will assume you are not serious.
Ordinarily, a lot of lenders would not want to give out loans to borrowers with low credit scores. But you can get a mortgage even with a bad credit score on MortgageKey. Furthermore, use some of the tips here to boost your credit score. Try to avoid delays while paying back your loans. Paying in full is a good way to boost your credit score in no time. Reach out to MortgageKey for more information regarding bad credit mortgages.