What is a Bad Credit Mortgage?
A bad credit mortgage is designed to help borrowers get on the property ladder if they have made mistakes in the past such as late mortgage or rent payments. Otherwise known as a non status, adverse or sub prime mortgage, bad credit mortgages are no different from standard mortgages, apart from slightly higher interest rates.
Because of their “high-risk” status, borrowers with blemishes on their credit history are forced to pay these inflated rates, increasing the overall cost of the loan. However, if you keep to the agreements of the loan and meet all the required mortgage repayments after three years your credit record will no longer be considered as adverse.
By switching mortgage products after the 3 years to a standard mortgage, called remortgaging, you could enjoy significant savings using discount interest rates.
Bad credit, whilst also known as adverse, poor credit, non status or sub prime, can mean a lot of trouble and frustration for those who suffer from it.
Unfortunately for borrowers with blemishes on their credit report, bad credit cannot be easily removed - unless it has been registered by mistake. Instead, by attaining a mortgage designed specifically for poor credit, sufferers can get on the property ladder. Your credit history is a file kept by credit scoring companies such as Experian and Equifax.