Can I get a mortgage after a payday loan?

Can I get a mortgage after a payday loan?

Payday loans are one of the biggest hurdles to overcome when looking at mortgage options. Very often deemed on a par with defaults and county court judgement in adverse mortgage lenders eyes.

Most lender will no use in the last 12 months. Why you might ask? Quite simply, mortgage lenders don’t like them as they can portray clients as not being able to manage their finances from one month to the next.Therefore making them seem more of a risk.

When payday loans first came onto the market, many people were encouraged to use these as a way of improving their credit score, as they believed this would increase the chances of obtaining a loan or mortgage in the medium to long term. It is the overuse of these which is the main concern for mortgage lenders. Leading to most of them changing their lending criteria.

A one off payday loan taken out in an attempt to improve your credit score or for a genuine reason (think emergency boiler or car repair) should not act as too much of a barrier to obtaining a mortgage, it is however recommended to work with a mortgage broker under such situations as they are able to relay this information to an underwriter rather than relying on an automated decision.

It is always the best advice to check your credit report, click here to see your latest report.

Can payday loans improve my credit score?

The simple answer is no. Payday loans are designed to offer short-term solutions to financial problems.  These types of loans are last resort lending, when you have no other options.

When lenders see the use of these loan it appears that the person isn’t managing their finances. The rates and fees associated are high and costs and payments can get out of hand if not managed correctly.

Payday loans and bad credit mortgages

When you’re looking for a bad credit mortgage and have recently taken out a payday loan, then I’m afraid your options are going to be very limited. If you have clean credit, some high street lenders will ignore them if they are paid off before application and you pass their credit score. If you have a large deposit this could open up more options available to you.

Speak to a payday loan mortgage expert

There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or can’t borrow what they need – just because one lender has declined you, don’t give up.

Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.

The expert brokers we work with have experience in dealing with all aspects of mortgages after payday loans, and importantly using the whole of the market to access the very best deals available.

To find out how we can help call us on 0300 124 5655 or complete our quick enquiry form to speak to a mortgage expert.

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