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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.