Trying to find a good finance deal can be hard work at the best of times, and finding yourself limited to bad credit mortgage lenders means you are going to have to work that little bit harder to find yourself a good deal. It is not impossible to get a good mortgage interest rate through a mortgage broker, however using a broker of course means you will incur fees, which could turn out to be quite expensive.
While it is going to be time consuming, it is possible to find yourself a good deal just by doing some research and shopping around, you may even be able to negotiate the terms being offered to you, especially if you have done your research and have competitors rates to use in your favour.
There are plenty of companies that offer mortgages to people with bad credit ratings, and they will all have a selection of different mortgage products to suit different circumstances. The terms you are offered will depend on how bad your credit rating is, and how much you are looking to borrow, but it is worth remembering that not all lenders expect you to meet the same criteria and some will be more relaxed with their lending than others.
However, this can be a danger in itself, as the more willing a lender is to give large sums of money to a high risk borrower, the more likely their products are to attract very high interest rates, and come with various other high cost charges such as arrangement fees and early repayment penalties. This is why it is very important to do in depth research into the terms being offered, to make sure you aren’t committing to something that could turn out to be very costly in the future.
One way to get a better interest rate on your bad credit mortgage is to be able to put down a large deposit. For some lenders this is one of their criteria, as they feel that by asking creditors to make a large financial commitment at the outset, they are less likely to default on any loan as they risk not only losing their house, but also losing a large sum of money. If you are able to show you have a substantial deposit that you are willing to put down, this could put you in a stronger position to negotiate a more favourable interest rate.
It may be that there is a scale of interest rates that get lower in relation to the amount of the deposit you are able to put down. These are all areas that are worth looking into, and even if they are not mentioned on any quotes or literature you received from mortgage lenders, it is not unreasonable to bring them up in discussions with a view to negotiating a good deal.
Don’t feel that because you are having to approach bad credit lenders that you are not in a position to negotiate the terms of your mortgage. The only difference between a high street lender and a specialist lender is the amount of risk they are willing to take. The interest rates and arrangement fees charged by specialists is one of the forms of security they take to safe guard themselves against potential defaults, hence the higher the perceived risk, the higher the interest rates will be.
If you find yourself with a bad credit rating through unfortunate circumstances, which you know will not occur again, then you may well find yourself a better deal by waiting a few months until your rating improves enough for you to be able to approach high street lenders. If this is not an option then use the fact that your credit rating is not at the extreme end of the scale and therefore you are not a very high risk, to get yourself a good deal.
