What can a Bad Credit Mortgage do for you?
Make sure you get a bad credit mortgage that's right for you
Applying for a mortgage can be complicated at the best of times, if you also have bad credit registered on your credit file things can soon become overwhelming. A bad credit mortgage will allow you to apply for a mortgage with adverse credit listed on your credit file. If you have applied to you bank or building society only to be turned down you may believe you can not get 
a mortgage anywhere. Thankfully that isn't the case and we hope to show you how you can help yourself when applying for an adverse credit mortgage and what a bad credit mortgage will do for you in helping you purchase a home.
If you already know what adverse credit items you have on your credit file then you have a good start, if you don't yet know what's registered on your credit file we would suggest getting hold of your credit report and having a look, if necessary speak to someone who understands how to read them so you can have the information put into plain English (we can help with this if necessary).
I have my credit file, can this aid my bad credit mortgage application?
Having your credit report and understanding what bad credit you have is a great way to start getting things in place to ensure your mortgage application proceeds as smoothly as possible.
When you look at what is registered on your credit file, you may find a few items you weren't aware of or had forgotten about. If you are able you should try and figure out who the money is owed to (its unlikely the credit file will state the name of the company that you may owe monies to). If you already know who your creditors are and have figured out which company has registered what on your credit file you can then put together a list of the companies and where you are at in your dealings with them - for instance you could list the name, the amounts owed, the monthly payments and whether they have registered missed payments, defaults or CCJ's.
This will allow you to put your case forward to any potential mortgage lender and, with the help of your mortgage broker show them that you are in control of your debts, even if they have had defaults or CCJ's registered against them, you know what's owed, who its owed to and are actively looking to rectify the debts with regular monthly repayments. This will go in your favour should any other issues crop up and will also let you know exactly where your bad credit debts are at.
It should be noted that if you disagree with any of the judgments of defaults listed on your credit file or they came about due to a one of event that is unlikely to be repeated (such as a serious illness or forced redundancy) you can add a note to your credit file which the lenders will be able to see, the notes should include how the judgments came about and under what circumstances and any information you deem relevant which would explain why the adverse credit you are making the note about is not a result of any fault of your own - this is information the lender will need anyway so if its on your credit file already then you will be saving yourself some effort for all future applications.
I have listed everything
- what next to help get a bad credit mortgage?
Next you need to let your mortgage broker know what you have. Adverse credit mortgage products allow certain types of bad credit to be registered on your credit file depending on the product and loan to value needed. If you are using a bad credit mortgage broker (a broker who specialises in bad credit mortgage applications) then they should be able let you know what is available to you prior to speaking to any lenders, they should know the market well enough to effectively match your credit listed on your credit file to a mortgage product that allows the bad credit you have on your credit file.
Your bad credit will obviously effect the interest rate that you can get, generally speaking the 'worse' the credit the higher the rate of interest. Depending on what adverse credit you have it may also effect the loan to value you are eligible for. Again generally speaking the 'worse' the bad credit the lower the loan to value which will mean you need a bigger deposit.
The best position to be in when applying for a mortgage, as far as adverse credit is concerned is to have all the bad credit repaid at the time of application - whilst the lender will still look at the bad credit registered on your credit file, the dates the CCJ's or defaults were registered and repaid could effect what they offer and having them cleared will go in your favour, clearing the bad credit should give you peace of mind also. If you are unable to clear all the bad credit but are able to completely repay some then its likely that paying off CCJ's first would be more beneficial than paying defaults as CCJ's are looked at more closely - some lenders will ignore all defaults when applying for an adverse credit mortgage.
Be sure not to use up the money you set aside for your deposit though as this will then mean you can not get a mortgage which defeats the object of what we are talking about here.
There are people who will raise questions about whether you should repay your bad credit or use the money to raise a bigger deposit which will reduce your borrowing. Whilst using the money to increase your deposit will mean you borrow less, clearing the credit will mean you should be able to get a better interest rate which will reduce the amount you pay so it depends on what you see as the most important and each case is different so the best way forward for you will depend on your individual set of circumstances.
Make sure you can repay your debts whilst paying the new bad credit mortgage repayments
Don't be to enthusiastic to get a mortgage that no thought is given to paying your monthly payments to bad debt (and any other debt) after the new mortgage is in place. You need to make sure that payment arrangements are in place and can be maintained after the mortgage is set up.
This can be done by yourself (if you have not already done so) or through a third party such as a debt management company - either way you should ensure that you can afford both the new mortgage and you existing debts or your new home could turn out to be a financial nightmare. A debt management plan will ensure your debts are repaid at a level that is affordable to you and will allow for any future movements in interest rates - if your living costs go up then your debt management plan can be adjusted to reflect this.
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