Moving house with bad credit: homeowner loans

First-time buyers need a good credit rating when they get their first mortgage. However, for any number of reasons, homeowners can find themselves in a situation where they would like to move, but they or a partner has a bad credit rating.

Moving house with bad credit depends mainly on the current financial situation. A bridge loan is ideal for most as they are not dependent on credit rating or income, just the equity in the property and the property’s value to be sold.

Here are a few tips to help readers move with bad credit:

Eliminate any unnecessary finances: Even those you think you can’t get out of (like your phone contract or car finance). Contact the lender and explain the situation and see what they are prepared to do.
Get better deals on essential bills: Energy, insurance, internet etc. There are many apps out there that can help you, set a day aside and go through them starting with the most expensive.
Improve your credit rating: Get a credit builder card, register to vote and stop applying for credit cards and loans! Hard credit searches affect your credit rating.
Stabilise your income. This is often harder for those who are self employed or are subject to seasonal business, however having regular financial commitments can help. Consider having customers and/or clients pay monthly as opposed to one lump sum.

Once you have done what you can with your recurrent finances, the only thing you have left to do is lower your mortgage payments.

You could sell up & repay debts. However, with income issues and poor credit rating, the likelihood of getting a new mortgage would be unlikely for what could be years. This would mean that you would have to rent, which could be a challenge with a bad credit rating, making the remaining value from the sale of the property redundant.

Alternatively, you could look into downsizing. The benefits of downsizing include lowering your mortgage payments while keeping as much equity in the house as possible. Bridging loans can be a good option.

How bad credit bridging loans can help move

Getting homeowner loans with bad credit might be easier than you think because they are only dependent on equity. Homeowner loans with poor credit are:

Not dependant on income
Not dependant on credit rating

A bridging loan can help you:

Move immediately and instantly lower your bills
Sell out of a chain

Selling out of chain offers many advantages and puts you in the driving seat. Your bridging loan is likely to be paid off sooner because selling your existing home out of the property chain is quick, and your old home is more desirable for buyers who also want to move quickly.

Please always speak to an unbiased mortgage advisor. Contact Friends Capital to learn more about our bridging loans for people with poor or bad credit.

Equity Release Options: Bridging loans vs remortgaging

A bridge loan or remortgage is a secured homeowner loan that allows you to release equity in a property. These types of mortgages allow you to borrow more money using the property you own as collateral.

You can remortgage to release equity or take out a bridging loan to purchase and develop a property to increase your income. Landlords and property developers can use bridging loans to turn properties around faster.

Bridging Loans

For homeowners, bridge loans are a fast way to attain short-term finance for several purposes, and they are even available if you have an outstanding mortgage. You can use them to bridge the gap between buying a new home and selling your old one if you are stuck in a property chain or have yet to find a buyer. You can use this short term loan to buy a property while you are arranging a long-term mortgage. You can borrow a large amount and also use bridging finance to renovate your home and increase the property value.

Property development also falls under the scope of this form of finance. You can use the loan for adding value to properties, but the funds can be used for other purposes such as generating an income, planning to downsize, moving quickly, or wish to buy any type of building or land.

Closed bridging loans have a set repayment date, cheaper bridging loan rates, and more likely approval. However, there are large penalties if repayment terms are not met.
Open bridging loans are ideal when you do not know the exact date you can repay the loan. With no set repayment date, they are great for covering legal hold-ups. However, they are more expensive because of the increased risk to the lender.

A bridging loan can be arranged for one day to eighteen months and typically have no monthly payments. They also do not have the upper age restrictions you encounter when looking to remortgage.

Remortgaging

If you still have an income, you can remortgage and take advantage of lower interest rates. Remortgaging is better financially but takes a long time for loan approval, and repayment terms are usually set for five years or more. If remortgaging will not meet your needs, then maybe it is time to consider a bridging loan.