Choosing a bad credit mortgage broker
Bad credit comes in many varieties. If you have had
mortgage
or loan arrears, had a CCJ issued against you or had missed
credit card payments then you have bad credit. Having bad
credit means that you may struggle to get a mortgage from a
high street or conventional mortgage lender. Bad credit
shows up on your credit file. Your credit file will be
searched by anyone that you approach credit for such as
credit card companies, morgage lender, loan company, secured
lender. These lenders can then see your previous credit
problems.
Not knowing what is actually stated on your credit file
makes this problem even worse as you do not exactly know the
depth of the problem.
So, you have bad credit but you still need a mortgage, how
do you choose a good, bad credit mortgage broker?
Mortgage brokers come in various flavours these days. Some
may only deal with a few lenders, some will be whole of
market which means they deal with all lenders and some will
be true independent mortgage brokers. Independent mortgage
brokers have to do 2 things; they have to cover the whole
market and they have to offer you a fee only option when
discussing their payment terms. Do not be put off by this.
Even though an independent mortgage broker has to offer this
option, they will often still be able to give advice on a
commission only basis or commission plus a client fee.
The most important thing to establish when searching for a
bad credit mortgage broker is how much experience they have
in dealing with these types of mortgages. Some brokers seem
to be experts at everything but this is rarely true. Ask
your mortgage broker how much of their business is bad
credit, ask them what types of clients and what types of bad
credit they normally deal with. Perhaps one of the worst bad
credit problems is bankruptcy. Discharged bankrupt mortgages
are a difficult area but their are mortgage brokers who are
highly skilled at helping clients in these situations.
So once you have established that your
mortgage
broker is experienced with bad credit mortgages you need
to discuss money. More importantly, you need to ask how much
YOU will have to pay for their help and advice. Some
mortgage brokers will receive and keep commission from the
mortgage lender and they will then charge you an extra 2-3%
of the mortgage amount. This is a large amount of money and
is excessive. They know that you have few places to go for
your bad credit mortgage so they hike up the fees.
However, there are still good brokers out there who want to
do the best for their clients and don't take you to the
cleaners at the same time. If your mortgage broker is
working on a commission basis an additional fee of up to 1%
of the loan should be acceptable. Some brokers will simply
offer a fixed fee of say £500. It takes no longer to work on
a £100,000 mortgage than it does on a £200,000 so why pay
twice the price when the fee is a percentage of the loan
amount?
When you have decided upon a mortgage broker then they will
need to ask detailed questions about your credit problems.
Some bad credit mortgage brokers will ask you to obtain a
copy of your credit file just to be sure of the facts. These
are all good points and the broker is on your side. They
need to know all of the details so they can get the best
deal. Once the mortgage is applied for your broker should
help with admin and assist with any problems along the way
until the loan completes.
Many
brokers now will contact their mortgage clients in the
future. This may be when any early repayment charges have
ceased on your mortgage. Depending on your circumstances, it
may then be possible to remortgage away from a bad credit
lender onto a prime scheme which will be a lot cheaper and
save you money.
If you have bad credit and need to pay off other debts to
consolidate them then a
secured loan bad credit might be another option.
