Payday Loans Don't Directly Affect Your Mortgage. But the mere fact that you have used this type of loan can be an indicator of your financial instability. But the mere fact that you have used this type of loan can be an indicator of your unstable financial situation. People choose to apply for a payday loan when they can't make ends meet, which is not a good sign for a mortgage lender.
The short answer is yes, it is possible to get a mortgage after using payday loans, but it can be difficult. Plus, you won't have the same flexibility compared to borrowers who have never used payday loans. Payday loans could have an impact on your chances of applying for a mortgage or future loans. Even if you repay your loan in full and on time, the mere fact that you had to apply for a loan tells potential lenders that your finances weren't perfect or were in order.
In addition, lenders will see that you take out several payday loans for a few months as a red flag. Lenders don't like to see a lot of payday loans on their credit, even if they're all up to date. Some lenders even claim they won't lend money to borrowers who have applied for a payday loan. Payday loans don't usually appear on your credit report.
But if you don't repay the loan, it could affect your credit. These loans are unsecured, the lender has no collateral and their interest rates are usually exorbitant. Applying for payday loans in the past won't necessarily stop you from getting a mortgage now. It depends entirely on the nature of the case and the policies of the mortgage lender.
However, you may find that many major banks and high street lenders are not willing to process your application simply because you have a history of taking payday loans. If you have any bad credit on your credit report, as well as the use of the payday loan, your chances of mortgage approval could be lower, but not necessarily non-existent. The best thing you can do is talk to a mortgage counselor who specializes in helping people in your situation. While it's impossible to argue that having one in your history isn't going to be a good thing, it's possible to get a mortgage despite having a history of payday loans.
Anyone with a history of using payday loans should consider the support of an expert mortgage broker by a company such as UK Property Finance when deciding which mortgage lender to target. At Mortgageable, we've looked at the challenges that payday loans present when you apply for a mortgage and how, if possible, to secure a mortgage with bad credit. Conversely, if your payday loan was taken out recently and you have additional imperfections in your credit history, you may find it harder to qualify for a popular mortgage and you may need to consider a more flexible lender. Even if the payday loan was taken out for legitimate reasons and repaid on time, the negative implications still exist.
Many people who apply for payday loans do so simply because they can't wait to save for something frivolous they want to have. You should do everything you can to make sure the rest of your credit report looks good, that way it will be easier for lenders to overlook the fact that you have a payday loan. If you are not sure if you have had a payday loan in the past or, in fact, any other type of loan, you can find out by looking at your credit report. Payday loans leave their mark on your credit report, as do late loan payments, rent arrears, loan application refusals, unauthorized overdrafts, etc.
They will not appear on online comparison sites and your banks will not tell you about them; they only work through specialized mortgage brokers, like us. Having an imperfect credit history is not a crime, although it is preferable to wait at least a year since your last due loan. .
