The primary method for people to get onto the property ladder is to apply for a mortgage via local mortgage brokers that take a variety of considerations into account, from current market conditions, credit scores, personal circumstances and several other factors.
This can be a problem for people who are not considered to be ideal candidates for loans, such as self-employed people, people with low credit scores or people who have recently discharged a bankruptcy.
Those circumstances, combined with inflation, cost of living pressures and mortgage rate increases can push traditional mortgage products outside of the reach of many people.
This leads invariably to the question of whether there is an alternative way to finance a purchase of a house if a traditional mortgage is not available and even a bad credit mortgage is difficult to acquire.
There are a few, although some are more suitable for people buying a house with bad credit than others. For example, it is unlikely that many people will have access to a cash buyer who can purchase the property on their behalf.
Bridging Loans
For people who are currently in the process of selling their current property but want to quickly buy their new home whilst this sale completes or are buying at auction, bridging loans can be a quick, straightforward if highly risky solution.
A bridging loan is a high-value loan with a very strict short-term deadline, and really should only be used to get onto the property ladder if you are certain you can secure finance afterwards or are confident that you can quickly sell the house (such as if you are house flipping).
Guarantor Mortgages
Sometimes known as “mum and dad” mortgages, these are mortgages where the assumed risk is accepted not just by yourself but by a friend, family member or another person willing to provide a mortgage security, often their own home or savings.
Sometimes these include an additional savings deposit that is returned to a guarantor as a form of incentive.
