It’s natural to assume that a poor credit history automatically counts you out of the running for a mortgage. Particularly in an era where subprime lending isn’t exactly commonplace on the UK High Street, you may wonder whether getting a mortgage at all is a realistic possibility.
As far as most major lenders are concerned, bad credit mortgage products are out of the question. But this doesn’t mean there aren’t alternative options to explore and more accessible products available.
It’s simply a case of knowing where to look for them.
How Credit History Affects Eligibility
The long and short of it is simple – a poor credit history will affect your eligibility for a mortgage. All mortgages are issued as secured loans, though major lenders subject applications to the same scrutiny as unsecured loan applications.
Irrespective of the value of the property used to secure the loan, the application process still involves extensive credit checks, financial status checks, evidence of proof of income and so on. If everything is above board with the one exception of your credit report, you’ll fail to qualify for a traditional High Street mortgage.
Major lenders seem to be oblivious to (or simply uninterested in) the fact that maintaining a flawless credit history these days is borderline impossible. Even the most responsible individuals and households occasionally slip up. Precisely why anyone interested in applying for a mortgage with an imperfect credit score would be wise to set their sights beyond the High Street.
Subprime Mortgage Products
Contrary to popular belief, the subprime lending sector in the United Kingdom is alive and well. A growing number of specialist independent lenders have set their sights on this important consumer lending market.
Subprime mortgages are designed specifically for individuals and joint-applicants with less than perfect credit histories. Rather than simply using credit scores as a ‘binary’ indicator of eligibility, subprime lenders take other factors into account. If the applicant is clearly in a position to comfortably fulfil their contractual obligations, their credit history may be deemed irrelevant.
Of course, it’s unrealistic to expect subprime mortgage products to be offered with the same interest rates and borrowing costs as their conventional counterparts. Where poor credit histories apply, the applicant may naturally be considered ‘higher risk’ by the lender. As a result, they may be subject to slightly higher interest rates and borrowing costs than applicants with a flawless credit history.
In any case, the point of importance is that bad credit does not necessarily mean you cannot get a mortgage. Terms and conditions vary significantly from one lender to the next, but just as long as you set your sights beyond the usual High Street names, you’ve every chance pinpointing your perfect mortgage product.
How to Get a Good Deal on a Subprime Mortgage
Whether you’re applying for a conventional home loan or a subprime mortgage, the importance of comparing the market cannot be overstated. With hundreds of lenders offering thousands of products for all purposes, it simply makes sense to consider as many as possible.
Starting out, it’s a good idea to use an online mortgage calculator to find out how much you can afford to borrow and comfortably repay. After which, there are several steps that can be taken to ensure you get the best possible deal on your subprime mortgage, which include:
Once again, it’s inevitable that a poor credit history can and often does complicate the process of qualifying for a mortgage. Nevertheless, there’s nothing to say you cannot access a competitive mortgage with a reputable lender, irrespective of how imperfect your credit score may be.
Whether you are tired of your 9 to 5 job, or you just want to make an additional income, turning a hobby that you love into a business only makes sense.
In the dark ages of the 1980s and 1990s, it would have been a tricky endeavor to find clients or customers when starting a new side business. You would have had to make your own business cards using your dot matrix printer and Print Shop, and you would have had to find your customers by putting up fliers at the local grocery store. Now, starting a business is easier than ever. All you have to do is take the first step and get started.
Determine which of your hobbies can be monetized. Do you enjoy making soap or crocheting scarves? Do you love animals and exercise and would like to earn extra cash walking dogs? Do you love to write or take photos? Are you an amateur graphic designer or would you make a great personal shopper?
Others around you may give you ideas on how to make extra money, but if those ideas don’t give you a spark of excitement, they may not be for you. Starting your own business, even a small one, takes a lot of work. If you aren’t excited about how you are making money, your company may dwindle quickly.
This may be hard to hear, but people may not want to buy what you’re selling. Before you start your home decorating business, make sure others are genuinely impressed with your style. Before you spend hundreds of dollars on supplies to make front-door wreaths, see if you can sell a few of them to friends and acquaintances. Reach out to those in your target market, and see if they are interested in your products or services. One other tip? Don’t take business advice from your mom. She thinks everything you do is wonderful and is sure that everything you touch will turn to gold.
If you have a full-time job or are a busy stay-at-home parent, it is hard finding extra time in your schedule to do all the necessary planning, preparing, and marketing for your side business. You may be excited about the idea of photographing weddings, but you aren’t enthusiastic about figuring out the steps you need to take to get a business license.
You may be excited to sell your artwork online, but you aren’t excited about figuring out how to ship your pieces to your customers. To keep yourself on track, create a to-do list for each day or each week. Have an accountability partner, perhaps a person who has his or her own business, check in with you. Take baby steps every day.
You need to start thinking like a business owner. If you need raw materials for your business venture, you need to find suppliers who can provide such materials for you at a low cost. Check all local and online resources. Add in shipping and transportation costs. See if you can get a discount for buying in bulk. You cannot set a price for your product unless you understand the costs of your time and supplies. It is a mistake to skip this step. You are in business to make money, and you may find it difficult to compete with large companies who can buy supplies at a fraction of the cost that you can.
No one wants to annoy their friends and family members with constant sales posts. You probably have unfriended people over such shenanigans in the past. Instead, start a business-only social media account and invite your friends and family members to follow you on this separate page. This way your friends can be supportive of your new endeavor if they choose to do so. Give prizes or discounts to those who share your page with their friends.
One of the most challenging aspects of starting a new business is finding customers. If you have tapped out your friends and family, and would still enjoy more customers, become part of those tried and tested website communities that will help you sell your products or services. Figure out how to sell on Amazon. Start an Etsy store. Do freelance work through Upwork or Fiver. Customers already flock to these sites to find products or services, so why not be there waiting for them?
Congratulations on starting your new endeavor. It is quite satisfying making money by doing something you love.