What is a bad credit mortgage?

A bad credit mortgage is a product that has been specially designed to help people with credit problems buy a property, or refinance to pay off other debts. The bad credit mortgage market has grown over recent years, in line with the increase in people who have a bad credit history. It is estimated that one in four people in the UK would be declined a standard mortgage because of their bad credit. The main mortgage lenders, together with new specialist companies, have designed products that are targeted at this market, which means that people looking for a mortgage of this type have plenty of choice.

What's the difference between a bad credit mortgage and a standard mortgage?

In essence, a bad credit mortgage is very similar to a standard mortgage. A lender will loan you an agreed amount of capital, which you pay back to them with an agreed rate of interest added. You can choose from products where the interest rate is fixed,
or where it can vary in line with inflation. The main difference is that the interest rates may be slightly higher than normal and there may be restrictions on how much money you have to pay and how often. When you choose a bad credit mortgage, you need to be sure that you can meet the required terms; if you can show that you are making regular payments as agreed with the lender, it could help your credit rating.