Bad Credit Ratings and Getting a Second Mortgage Loan

Copyright (c) 2009 Gordon Parkes

As the credit crunch bites and banks become less willing to lend, you may think that your bad credit rating will make it harder to borrow money, especially if you are looking for a second mortgage.

However, if you go about it the right way, finding a lender can be fairly simple. When you are looking to remortgage your property, there are a few easy steps to take.

First, decide on the amount you want to borrow. This will depend on the purpose of your loan. For example, if you are remortgaging to invest in a buy-to-let property, you will be able to borrow between 70-80% of the sales price. When you take out a buy-to-let mortgage you may have to prove that rent will cover at least 130% of the mortgage payments.

However, if you are looking to fund home improvements, you will probably want to borrow much less than this. You may want to remortgage if your home needs vital repairs, or if you are looking to move and want to spruce up your property. Home improvements can increase the chances of making a sale, and could potentially increase your asking price.

You may also be changing your current mortgage lender or want to renegotiate with your lender. Either way, your aim will be to find a lower interest rate. This can reduce your repayments, which means you will have more money to save every month.

Searching for a lender can be highly complex, if you do it yourself. For example, contacting one lender means you can compare the mortgage deals available from just one company.

If you contact several banks and building societies, you will have to go through the complicated and time-consuming process of comparing numerous interest rates, terms, fees, charges and conditions.

One way to simplify this process is to work with a broker. They will act as your personal shopper by searching through hundreds of mortgages to find the one that suits your needs and budget.

When you apply for a second mortgage, you should ensure that you have all the necessary paperwork at hand. This can include:

- Payslips.

- Utility bills.

- Recent bank statements.

When you apply for a mortgage through a broker, you should only have to fill in one application form, rather than completing different forms for each potential lender.

Whatever the purpose of your loan, a broker can take the hassle out of finding a second mortgage.


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