Everyone starts with a clean slate, no credit at all. However, with time, you take one or more loans to finance your projects. Your repayment behavior leads to either a bad or excellent credit.

If you make payments on time, your credit score will be okay. Otherwise, failure to make repayments on time earns you bad credit. What does this imply?

A lower or bad credit score means you’re at risk of defaulting. As such, financial institutions will avoid advancing their money or charge higher interests for the same.

But what happens if you want to take a mortgage and buy a home? You’ll need to boost your chances of securing an adverse credit mortgage. Here’s what you need to do.

But First, What’s a Bad Credit Mortgage?

Every person dreams of owning a decent home. For some, getting a mortgage is a more straightforward process. However, if you have a bad credit history, mainstream mortgage lenders will ignore you. That’s where bad credit mortgage comes in.

The following tips will boost your chances of securing an adverse credit mortgage.

Ensure Timely Payments

It might seem like an obvious thing. But making your payments on time helps your mortgage application in various ways.

First, it assures the lender of your commitment to making timely payments. Focus on timely payments before applying for any loan or mortgage.

Yes, the requirements will vary from one lender to the other. But most consider bankruptcy as the most severe. Don’t worry if you missed your phone bills or small debts. The lender is likely to avoid these.

Have a Larger Deposit

Mortgage financing requires you to make a down payment for your home. A higher deposit (typically between 15-40% is looked for by bad credit mortgage lenders) increases the chances of your offer being accepted.

Other than increasing your chances, it also reduces the costs of buying a house. It does so by reducing the principal amount you’re getting via loan: the result, lower interest costs on the payable amount.

If possible, ensure you have at least 15% of the purchasing cost. Doing so reduces the loan amount to 85%, assuring the lender of a shorter repayment period. For some, they may reduce the interest rates to homebuyers with a higher deposit.

Apply for One Mortgage at a Time

Applying for one mortgage at a time increases your chances of getting a loan. Remember, all your loan applications are sent to your credit score. Applying many times shows you’re struggling to get a lender.

You can avoid this by researching what you need. Only make an application if you’re confident about your needs.

Conclusion

Building your credit score takes time. A good or bad credit score doesn’t mean you’ll get a mortgage or not. Take your time before applying-it’s a long term commitment. You don’t want to mess around with it.

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Securing a Bad Credit Mortgage