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Mortgage Advisor & Director
Can you get a mortgage if you've used payday loans?
The answer may not be what people expect. Payday loan companies are notorious for high interest rates and fees, which can negatively impact the chances of your mortgage application being approved. In order to avoid this issue, it's important that payday loans are only ever used as a last resort!
If you've used any payday loans, you should ensure they're all paid off before applying for a mortgage to boost your chances of mortgage approval. At Teito, we've helped many people like you to find their perfect mortgage - and the process is stress-free! Whatever your situation, you can start comparing more than 20,000 deals now, and apply online!
How do mortgage lenders view payday loans?
Mortgage lenders are aware of payday loans and the dangers they can pose for prospective mortgage applicants. The potential for payday loans to affect mortgage approval is a significant issue and one that's worth being aware of.
Taking on a payday loan can signal to lenders that you have money or credit issues, and can be a red flag that you are an unreliable borrower who may find it difficult to keep up with mortgage repayments. That's right - mortgage lenders may reject your application if they know you've used payday loan providers in the past.
How do payday loans work?
A payday loan is a type of credit given to people with bad or no credit history who need cash in an emergency situation.
The borrower pays back the money plus interest on their next payday and can be up to 1500% APR! Payday loans should never be used as long term solutions for financial concerns - only ever if absolutely necessary.
Are payday loans a bad idea?
Well, even if they seem like an ideal solution at first glance, these types of credit sources have been known not only as damaging but also difficult to repay due to their high interest rates and fees.
This is worth bearing in mind when you're considering payday loans as a short-term solution to your finances: payday loans are designed for quick and easy access to money, but this can come at the expense of your long-term financial security.
Credit repair tips
If your credit rating could do with some TLC, you can improve your score with a few simple steps! This will help to boost your chances of mortgage approval.
Pay off outstanding debts first. The quicker they're paid off, the better chance you'll have of being accepted for a mortgage because it means less risk to lenders that you'll default on your mortgage repayments. Make payments on time and use credit sensibly to show you're a reliable borrower.
Check your credit report. You can do this for free on sites like Credit Karma. Doing so will give you an idea of what's in it and if there are any issues or errors that need attention to ensure accurate reporting.
Limit applying for new credit. Too many credit searches in a short space of time can indicate to potential mortgage lenders that you are struggling with money and won't be able to afford mortgage repayments.
Remember, payday loans are designed for quick and easy access to money! They're not a long-term solution or way of life - so make sure you know the risks before taking them out.
Learn more and apply online now
We're here to help you turn your dream of owning a home into a reality. We know that sometimes it's hard getting approved for a mortgage with a blemished credit history, but we have the experience and expertise in knowing which lenders will be willing to consider your application.
At Teito, we've got years of experience in getting mortgage applications approved for people in all situations. Don't let your less than perfect credit history hold you back, start comparing deals now!
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
