Finding an affordable mortgage with a poor credit history can seem impossible but this market sector is catered for with bad credit mortgages. A bad credit mortgage is also known as a sub prime, non status, credit impaired or non-standard mortgage. If a mortgage or remortgage application has been refused due maybe to a past poor credit history, there are several mortgage lenders in the market who will specialise in providing bad credit mortgages.

Many people in the UK have had credit problems ending up with problems repaying debt and with a poor credit rating. Research shows that 25% of borrowers in the UK have a bad credit score for different reasons, redundancy, illness, taking on too much debt, county court judgements or interest rate rises. Whatever the reason, lenders who specialise in the sub-prime market compared to traditional providers can offer bad credit mortgages to individuals with a poor credit history which can repair an adverse credit rating. According to further research, one in four people in the UK would not qualify for a standard high street mortgage.

Bad Credit Mortgages Vs Traditional Mortgages

With minimal debt, it is possible to get a mortgage from a traditional lender, but with larger debt problems then bad credit mortgages are an option. There are some mainstream lenders as well as specialist providers who will consider lending to people with a poor credit rating.

Bad credit mortgages often come at a higher cost than traditional ones offered and sometimes it may be advisable to improve a poor credit score and then apply for a traditional mortgage as it could save thousands of pounds. Now regulated by the Financial Services Authority since 2004, the previous poor reputation associated with lenders in the bad credit mortgage sector for extortionate fees has virtually disappeared.

Bad credit mortgages usually cost more as the provider is lending to a borrower with increased risk due to poor financial circumstances. Although excessive fees should not factor into the mortgage and the small print should be fair and reasonable. Attention should be paid to fees and charges as some bad credit mortgage applications can cost up to four times more than a standard mortgage.

Some lenders will adjust their interest rates to high-risk borrowers yet with the correct repayment then after three years, a poor credit history would have benefited considerably. After the three year period has finished then it would be possible to switch from a bad credit mortgage and remortgage to a high street lender with lower interest rates. Bad credit mortgage lenders will consider lending up to 90% of the value of the property and in some cases 95% depending upon the circumstances. Some specialist schemes will even offer a 100% bad credit mortgage. In some cases, interest rates may be reduced if the mortgage required is 75% or less than the value of the property. Financial advisers who specialise in bad credit mortgages offer reliable advice and check the current financial situation with what bad credit mortgage options are out there.