You see the advertisements in newspapers, on TV, and on the Internet about credit repair. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:
· “Credit problems? No problem!”
· “We can erase your bad credit — 100% guaranteed.”
· “Create a new credit identity — legally.”
· “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
Do yourself a favor and save some money, too. Don’t believe these statements. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report. But you can take bad credit mortgage and repaying it you will repair and improve your bad credit rating. Applying on bad credit mortgage you can see that many different options are available, whatever your situation; first-time buyer, home mover, remortgaging, buy-to-let or Right to Buy.
Bad credit mortgages will help you rebuild your credit quickly. If you want to apply for a bad credit mortgage, you’ll need several pieces of information before you proceed. First, make sure your credit report and score are accurate. If removing old or closed accounts or removing something that is incorrect from your credit report can improve your score, even slightly, it is worth the effort. Next, you’ll need data on your income including pay stubs, deposit slips and the like. Bad credit mortgage loans will often hinge on your proof of steady income. Finally, you’ll have strict repayment guidelines. Make sure you can make the payments on time and in full. Don’t get in over your head and make your bad credit situation even worse.
Advantages of bad credit mortgages
You invest in your own property as opposed to renting; mortgage repayment are likely to be equal or slightly higher than monthly rent, you can use this equity later in life to move up the property ladder.
Bad credit mortgages can be a temporary solution; after about 3 year, provided you’ve kept up all your payments and your credit rating has improved, it will be possible to remortgage to a standard mortgage and benefit from a lower interest rate.
You will also find out that:
· Bad credit mortgages allow thousands of people access to home loans they might otherwise not get.
· Increased competition means the interest rates charged have come down considerably in recent years.
· A full range of mortgage types is available.
· They are still more expensive than mainstream mortgages and will remain so.
· You can only get a bad credit mortgage via a mortgage broker.
When considering your options for bad credit mortgages, look out for the following three pitfalls that can sneak up on you:
1. Fees and Penalties – Sub prime loans can not only cost more to process, they can also incorporate higher late fees and payment penalties of which you should be aware.
2. Prepayment – Some bad credit mortgage companies need you to stick with their program to ensure they make their allotted profit – and this can mean prepayment penalties (a fine for paying off the mortgage too quickly). This can mean a huge loss if you refinance too soon, so watch out for length and amount of prepayment penalties.
3. Rewards – Some mortgage companies and banks will reward you for improved money management. For instance, if you make a number of payments on time, your interest rate may be reduced. These kinds of incentive rewards are great for folks determined to turn over a new and better credit leaf.
Diana Wills, independent researcher in mortgage market with emphasis on people with bad credit problems who need to know more about bad credit mortgages, its specifics, advantages and disadvantages.
