What Mortgage Options Do People with Bad Credit Have?

Having a bad credit score should not prevent you from securing a mortgage loan and paying for that dream house you have always wanted. Instead of spending the money on rent, you can actually gain so much more by buying a property with the help of a good mortgage loan. There are some options to consider when you have bad credit and you want to take out a mortgage loan. We’re going to take a closer look at some of them in this article.
Subprime Mortgage Loans
Lenders will review your credit history to determine your risk factor when you apply for a mortgage loan. This risk factor will, in turn, define the interest rate you get with the loan. If you have a bad credit score, chances are you’ll have to pay a higher interest rate – and other potential premiums, such as credit insurance – to offset the higher risk factor.
There is nothing wrong with using a subprime mortgage to buy a house, especially if you’ve been spending a lot of money on rent. However, you do need to pay close attention to the terms of the loan.
Avoid loans with pre-payment penalties. You want to have the option to repay the loan early or switch to a better mortgage loan once your credit score improves. You should also check the monthly instalment amount. Take advantage of other financing options to help increase your down payment and lower the principal amount for a more affordable mortgage. You can visit this page for more information on bad credit loans.
Boost Your Credit Score
Taking the time to review your credit history and boosting your credit score before applying for a mortgage loan are also worth considering. You can actually improve your credit score quickly by doing certain things.
Start by reviewing your credit history. When you spot incorrect entries – such as a repaid loan that still appears on your credit history – you can actually file to have those entries removed. You’ll be amazed by how quickly you can improve your credit score this way.
You should also try to repay unsecured, high-interest loans quickly. It is much better to convert them into cheaper loans or repay them altogether when you can, since this type of loan usually affects your credit score the most.
Compare and Compare Some More!
You can use other types of loans or place other available assets as collateral to make buying a house more affordable. Even when you have bad credit, there is no shortage of options on the market. The key here is to take the time and compare as many financing options as possible. Go with the one you’re comfortable with the most in terms of annual interest and the overall costs of using the loan.
You can also get a mortgage loan preapproved to know exactly how much you can afford to spend on the property. You’ll be able to search for a suitable house to purchase rather easily with a clear budget in mind. The options we talked about earlier will help you finance the purchase without hassle.

Christopher Walkey

Founder of Estate Agent Networking. Internationally invited speaker on how to build online target audiences using Social Media. Writes about UK property prices, housing, politics and affordable homes.

You May Also Enjoy

Home and Living

High Quality Modular Homes for the UK

Are you looking for added accommodation space in your garden / on your land? Modular Living Homes by tutumHOUSE offer a new way to live – minimalist in form, rich in experience. “There are approximately 9.6 million homes in the UK with a garden shed, and around 52% of the population owns one.” asgardsss There…
Read More
Estate Agent Talk

The most stressful places to move to in the UK

With more people in the UK moving homes during summer than any other season and the average cost of moving in the UK rising to over £14,000, picking the right place to move to has become more crucial than ever. Luckily, new research from Pay Less for Storage reveals the UK cities that make life easiest…
Read More
Estate Agent Talk

Time-Traveling Estate Agent Sequel Climbs Amazon Charts

A UK Estate Agent Currently Bringing Joy to People’s Lives – Shame He’s Fictional…   Eric Meek, the fictional estate agent created by author Dale Bradford, is back for a second outing in The Time‑Travelling Estate Agent 2, a sequel that is already climbing Amazon’s bestselling time‑travel rankings. Estate agents were recently highlighted as the third…
Read More
Estate Agent Talk

Is it finally time for lenders to back green homes?

Andrew Smith weighs the risks and rewards Property developers are increasingly pitching green homes to lenders; however, with sales cycles slowing down and repair costs rising, is now the right time to back sustainable builds and at what price point is there market demand? Sustainability is continuing to shape our future of construction with the…
Read More
Breaking News

Breaking Property News 24/07/25

Daily bite-sized proptech and property news in partnership with Proptech-X.   OpticWise – digital infrastructure in commercial real estate If your building were a product, how would it perform on the user experience scale?  Week 9: Experience as Infrastructure – Designing for Human-Centric Buildings Welcome to Week 9 of our 52-week journey into the future…
Read More
new build homes colchester essex
Breaking News

UK Housebuilding Falters as Construction Hiring Flatlines

New research from Inventory Base reveals that UK construction industry employment has increased by almost 11% in the past five years, but there has been less than 1% growth in the past 12 months. Inventory Base’s analysis of the UK construction industry shows that in 2024 (latest data available) it employed an estimated total of…
Read More