Bad Credit is considered a stigma by the prime lenders in UK. If your credit record is not good, that is, you have missed payments, arrears, defaults, county court judgements (CCJs), or bankruptcy against your name, you will not get any loan from the prime lenders, let alone a mortgage loan.
The sub-prime lenders of UK, however, don’t have any such rules forbidding them from granting loans to people with adverse credit. You may easily obtain a bad credit mortgage loan from them.
A bad credit mortgage loan is secured against the house for which you are granted the loan. Since there is a security, for the lenders a bad credit mortgage loan is a low-risk loan product. Absence of risk allows the lender to offer the following advantages to you: bad credit installment loans
- Easy terms and conditions
- Low interest rates (low annual percentage rates)
- Low monthly instalments
- Long repayment term, varying from twenty to thirty years.
Since a bad credit mortgage loan is a long-term loan [http://www.adverse-credit-first-time-buyer.co.uk/bad_credit_mortgage.html], it will be wise if you decide to pay a deposit (down payment) for the loan. The deposit could be anything from five to ten percent of the current market price of the house. The deposit will bring your monthly instalments down even further.
The repayment of the bad credit mortgage loan is very easy and flexible. There are three main modes of repayment (simple repayment, interest only repayment, and partly interest partly repayment). You are free to choose any one of them. In the simple repayment mode, you pay part of the capital and the interest. In the second method, you pay only the interest for the entire term of the loan. The capital is paid at the end of the term. To help people pay the capital, there are saving vehicles like individual saving accounts (ISAs), pension, and endowment. In the third mode of repayment, the loan amount is divided into two and you pay interest only for one part and both interest and capital for the second part. Since the mortgage loan market is growing day by day, lenders have introduced more flexible modes of repayment as well.
Choosing the right bad credit mortgage loan is difficult. Presence of numerous lenders in the market makes it difficult for borrowers to choose the right deal. If you, too, are faced with the same difficulty, take the help of a financial expert. Since mortgages are long-term loans, any mistake on your part can prove to be costly in the long run.