Finding a mortgage if you have a poor credit history is difficult and has to be approached very carefully because of the shortage of lenders in this market. Having the advice of an experienced and qualified bad credit mortgage adviser like myself will greatly improve your chances of getting a mortgage.
I specialise in bad credit mortgages because there are very few brokers dedicated to offering advice in this area. Understanding the lending criteria for bad credit mortgages is far more complex, detailed and time consuming, compared with dealing with a standard mortgage from a high street lender.
With only a few subprime mortgage lenders to choose from, getting it right first time is very important.
What is a Bad Credit Mortgage?
A bad credit mortgage, typically offered from a specialist lender, is a type of mortgage aimed at those who have a poor credit history and would otherwise struggle to be accepted for a standard mortgage from a high street lender.
Depending on the lender and personal circumstances, bad credit mortgages can be offered to applicants with a wide range of credit issues, such as missed payments and arrears to defaults and CCJs. I’ve also helped many clients with more serious credit issues, such as IVAs, Discharged Bankrupts, DMPs and repossessions.
Can I get a Mortgage with Poor Credit?
The short answer is yes, but it’s all about the timing.
Looking at your credit history alone, I can always get you a mortgage, so the questions should be ‘when can I get a mortgage with bad credit’ and ‘how much could I borrow?’
When can I get a mortgage with bad credit?
The amount of time between the adverse marks on your credit file and your mortgage application, is crucial.
For example, if you had a CCJ or Default that was registered more than 6 years ago, you could get a mortgage today without a problem. However, if they were 3 to 6 months ago, it would be much harder to get a mortgage – though not impossible, as I have lenders who would consider you even in these circumstances.
If you are in a Debt Management Plan, some lenders will only lend if it finished 12 months ago, whereas others say it must have been running for 12 months but does not have to cleared. And some lenders even say there is no minimum term it has to have been running.
How much could I borrow with poor credit?
If you are buying a Shared Ownership property, you could borrow up to 100% of the share you wanted to buy, so you would not need a deposit. This option makes it possible to get a 100% mortgage with bad credit.
If it was under the Government’s Help to Buy scheme for new build properties, then you would only need a 5% deposit with the Government adding the other 20%, with a mortgage for the remaining 75%. This is a popular choice for those looking for a small deposit mortgage with bad credit.
For a standard property you could borrow up to 95% with poor credit, if your credit history has been OK for the past few years. This is where time is important as the shorter the period between credit issues and the mortgage application, the more deposit you will likely have to put down.
Why should I use a Bad Credit Mortgage Broker?
Applying for a mortgage with adverse credit is a tricky business. If your mortgage application is rejected, this can act as a red flag to other lenders. This is why it’s crucial to get it right first time, by using an experienced and qualified bad credit mortgage broker, who can tell you with a high degree of certainty, who is likely to lend, and who is not, based on your credit file and personal circumstances.
Unlike applying for a mortgage with a high street lender, where there are sourcing systems that quickly & easily find the best mortgage for you by entering your details, there is no such help when it comes to finding a bad credit mortgage.
First, a Broker has to read a copy of your credit file and understand its contents. It requires a real understanding of the information on your file to be able to match the information to a lender, and this can only be learnt with time and experience.
Having read your credit file, a broker has to manually look for an adverse mortgage lender that would consider you based on your credit history (as well as other factors such as income and employment status). There is no automatic process for this so each lender’s criteria has to be assessed to see whether they would lend.
Specialist Bad Credit Mortgage Adviser
The tricky one. Would you lend to someone if they had missed payments on their mortgage? Thankfully, there are lenders who will.
Many people I talk to are delighted to find that after talking to me they do qualify for a mortgage having been made Bankrupt.
Has Your Contractor Mortgage Been Declined? Special circumstances need a Specialist Contractor Mortgage Broker.
The main consideration a credit lender will want to know when looking at the CCJ’s on your credit file is the date they were registered.
Having been refused a mortgage isn’t the end of your home buying dream, but what you do next is very important.
Any Defaults registered over 2 years ago can be ignored, do not have to be repaid and you could borrow up to 100% of a property’s value.
I will help to prepare your applications, limit the impact of your DMP, and secure the finance needed to purchase your new home.
I know of 6 lenders that offer mortgages if you have a poor credit history. One of them will accept 5% Cashback from the builder as your deposit!
If you have equity in your home, you could arrange a remortgage to clear your IVA early by offering a reduced settlement amount to your creditors.
This is the tricky one! Understandably lenders are extremely wary of lending if you have previously had a property repossessed.
Mortgages are readily available from the High Street however many of them will only accept you if you have a clean credit history.
100% Mortgages Available! A Shared Ownership property can help you get on to the property ladder sooner as you only need a smaller mortgage.
Bridging finance really should be your last place for finance having exhausted family, friends, mortgage lenders and second charge lenders.
Do you need a loan but your existing mortgage lender has said no? The answer maybe a Second Charge Mortgage.