Yes, you can get a mortgage if you have previously had a payday loan. It may be more difficult to get a mortgage than if you haven’t had a payday loan, however it is definitely possible.
- You will probably not have the same level of flexibility as those who have not previously had a payday loan.
- Lenders all have specific criteria when it comes to mortgage applications so some lenders may be more flexible surrounding loans and credit history than others.
Will Lenders Assess My Previous Payday Loans When I Apply For a Mortgage?
Yes, lenders will usually assess your history of payday loans if you apply for a mortgage with them.
Lenders will usually assess how frequently you have taken out payday loans to see whether it is a regular occurrence or simply a one off incident. Payday loans are not designed to be taken out on a regular basis, and instead are supposed to last an individual until their next payday if they need some emergency funding due to unforeseen circumstances occurring.
Lenders will also usually assess how recently you took out your last payday loan. If you have recently needed financial aid, it is less likely that a lender will offer you a mortgage with them as it will appear that you are struggling financially and therefore will be less likely to manage your mortgage repayments.
In addition to this, lenders will always check if you have had credit problems before offering you a mortgage. Having a poor credit score or a bad history of repaying loans will mean it is less likely they will offer you a mortgage with them.
Typically, lenders are more likely to provide a mortgage if you have not resorted to using payday loans in the last five years. If your last payday loan was repaid over five years ago, lenders will be able to see a recent history of repayment.
Lenders will assess credit history and payday loan usage when you apply for a mortgage with them
Will Payday Loans Help You Acquire a Mortgage?
No, taking out payday loans will not help you to acquire a mortgage. All lenders have their own specific policies surrounding payday loans, and they will use credit scores to make assessments on all applicants.
Typically, lenders will prefer a borrower who has not previously relied on payday loans. Payday loans demonstrate that an individual typically struggles to make it between paydays which can lead them to believe they will not be good at repaying their mortgage within the agreed timeframe.
It is understandable that people may believe payday loans can help you with a mortgage application. Repaying loans on time can help you to improve your credit score, demonstrating that you are a reliable individual when it comes to borrowing money.
In spite of this, most lenders will prefer that borrowers have not used many alternative loans in the first place to avoid any chance of debt not being repaid.
Can I Get a Mortgage From My Bank After Using Payday Loans?
It is possible to obtain a mortgage from a bank after using payday loans. It is advised to speak to an expert before you apply for a mortgage and explain your financial history to them.
Speaking to an expert will help you to gain a better understanding of which banks and lenders are most likely to offer you a mortgage. This can help you save time and not waste money by applying and being refused a mortgage due to a bad credit history or overuse of payday loans.
