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Joint Mortgage When the Co-Borrowers Have Bad Credit

Mortgage Credit score issues

Usually, a joint mortgage is considered a convenient method to get on the property ladder. The repayment capacity of more than one person makes it easy to qualify for the funds. However, when your other borrowers have bad credit, that same strength becomes the weakness. Because of their poor score, you may also get rejected.

A mortgage is a big decision, and it is not possible to change it due to the

Credit score issues. Some solutions should be there with the existing situation.

Here are some of the ways that tell how to qualify for the mortgage –

The bad credit applicants should first of all work on the deposit

Recommended reading: Due Diligence

Deposit is always the first element that builds a strong wall around a poor credit score applicant. With a bigger size of deposit or down payment, you can experience the following benefits-

  • You need a lesser amount to borrow through a mortgage, which means lower LTV is not a matter of worry. Try to cover a more significant part of the property value through the mortgage.
  • The lender needs to see an excellent financial capacity in the borrower as compensation to the bad credit score. If your joint borrowers can provide a significant share of the deposit, the approval happens quickly.
  • It also helps in borrowing the amount that is either equal or closest to your amount you want to borrow. 
  • With the big deposit, it is always easier to find the lenders ready to lend money through the soft credit check process. It’s an essential condition for a poor credit person because a search footprint is one of the most frightening things.

Hire a mortgage broker to find you something suitable

For an applicant, the mortgage industry is always confusing, and there are many questions about the formalities. In the case of derailed payment history, the same concerns become even more critical.

Recommended reading: NRIs and Commercial Property

Mortgage brokers know the industry’s ins and outs and have lenders on their panel for almost every situation. Good credit applicant to fair and poor credit applicant all can get their due and required mortgage solutions.

The broker will find you the best possible lender with the most affordable deal available in a bad credit situation. If you keep your finances organized, it can suggest some good options on guaranteed mortgages with poor credit. These loan options have the surety of approval if the applicant qualifies on the essential affordability parameter. Take the benefit of the expertise of the broker and explore the maximum number of options available. You can surely have satisfying answers.

Once you pick a deal through the broker, you do not need to worry about the documentation. The broking company will do that. It will also take care of the total cost by bargaining from the lender for the best lender.

Recommended reading: Can NRIs buy property jointly

Play safe in personal finances in the last 6 months

You should know that the previous 6 months before you apply for a mortgage are very crucial. Every financial transaction and decision affect your approval decision taken by the lender. It is vital that your joint borrowers stay cautious and do not make any financial mistakes.

Timely payments of bills and proper debt management are necessary steps that they need to bring in immediate practice. There is no escape window if the applicant acts carelessly in his/her finances. Rejection may happen instantly if the mortgage provider notices any careless attitude. 

It is even necessary to tailor the spending habits and think before any purchase. For example – it can be very unhealthy for the financial health of the co-borrowers to make ‘buy now pay later’ purchases. Such type of spending behaviour is always considered irresponsible.

Do not apply for any new loan, such as personal loans, holiday loans, etc. Do not max out your credit cards, and do not keep a negative balance in your bank accounts. Anything that shows negative causes a negative impact.

Recommended reading: Property Possession Has Been Delayed?

Additional collateral

It is a rare option that people use, but it is one of the most promising ways to attain smooth approval. If any of the applicants can manage to provide any other asset of property as the additional collateral, immediate approval may happen. 

  • Approval becomes easy but still stay disciplined in finances
  • The lender on receiving a back-up can grant a rebate in rate
  • You come in the condition to negotiate the terms and conditions such as repayment plans, tenure, etc.
  • In case you get the lower rate, the benefit of smaller instalments come naturally. The money saved on the price of interest can be used to make part payments every two-three months.
  • You can have more number of choices of lenders. Most of the time, the poor credit score people always have fewer options.

Conclusion

The lender and the borrower can reach to the final destination of a good deal only through mutual coordination. As a borrower, it’s required for you cautious about the lender’s lending rules, but it cannot break the rules for you. Try to complete all the formalities word-to-word to show your determination to get approval.

Oh yes, the guarantor with a good income and a good credit score is also a strong pillar. He can change the game in your favour; try to find a person who owns all these qualities in financial life. The above suggestions are applicable not only in the case of joint mortgage but all the type if the applicant has a bad credit situation.

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Written by Jasmine Watson

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