Bad Credit Mortgages

  • Missed or late payments
  • Debt management plan
  • Discharged bankruptcy
  • Defaults, CCJs or IVAs

Bad Credit Mortgages

  • Missed or late payments
  • Debt management plan
  • Discharged bankruptcy
  • Defaults, CCJs or IVAs

Can I get a Mortgage with Bad Credit?

Have you been denied a mortgage based on your credit history? Have you ever wondered how to get a mortgage with bad credit? Our aim at Just Mortgage Brokers is to make it easier for you to find a mortgage regardless of your credit score.

We understand that it can be difficult to find a lender willing to provide a mortgage in these circumstances, but with help from our specialist advisors, you can get access to a potential mortgage with minimum fuss.

Bad Credit Mortgages

A bad credit mortgage is simply a term used to describe a mortgage arranged with a specialist lender for a borrower who has experienced financial difficulties in the past. Typically, a bad credit mortgage for someone who has had debt problems will be offered at a slightly higher rate than that found from your usual high street lenders and may also require a slightly bigger deposit or a larger amount of equity. In our experience however, it is not necessarily the case for everyone that, just because they have experienced problems in the past with their credit, they will need to go down the route of getting a bad credit mortgage from a specialist lender. The market has evolved over the last few years and some mainstream lenders are now considering elements of adverse credit, and those eligible can still obtain standard interest rates. Our expert advisers are fully qualified and following an initial discussion and sight of your credit report should be able to ascertain which route you may have available.

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Bad credit mortgage rates

Interest rates offered for bad credit mortgages are invariably higher than that provided by your mainstream lenders due to the perceived additional risk for the lender. Appetite for lending to those that have experienced credit problems however has increased over recent years and more mortgage providers have entered the market giving much greater choice. In addition, many lenders have continued to review and improve their rates together with their criteria as the competition increases, and as such margins over the standard mortgage rates have decreased.

The interest rate offered will be determined by the severity of the credit history but, also other factors can be taken into consideration such as your loan to value (sometimes referred to your LTV and determined by the amount of deposit or equity you have).

Typically, due to the complexity of the pricing of bad credit mortgage rates, these are not widely advertised nor shown in best buy tables. Much more research is therefore required which is where an experienced specialist mortgage advisor should be able to use their knowledge of the varying lenders criteria to source the most suited available product for you.

The kind of lenders that will typically be willing to extend a mortgage to a borrower with bad credit are usually the specialist niche-market lending companies. While still operating under the same rules and regulations as the mainstream providers, so your rights and your home are no less protected, they use far more flexible criteria, consider all kinds of situations and adopt a realistic approach to each applicant’s case.

The mortgage industry is still feeling the scars from the 2008 world-wide financial crisis that led to most lenders heavily restricting the availability of their product to only borrowers with perfectly clean credit histories and larger deposits or a low loan-to-value ratio (if they already had significant equity in their current property), giving providers the most security on the loan as possible.

The mortgage industry is still feeling the scars from 2008. This led to most lenders heavily restricting the availability of their product to only borrowers with perfectly clean credit histories and larger deposits.

As a result, a large sector of homebuyers found it increasingly difficult to obtain home loans, especially those with bad credit. This led to the growth of specialist mortgage providers entering the market, including bad credit mortgage lenders who cater specifically to those who have experienced financial difficulties in the past. Due to the very nature of their business, their criteria for applicants and interest rates are tailored to this sector of the market.

Whilst many mainstream lenders will either have no set rules for dealing with applicants with bad credit (or in fact just one criteria, which rules them out entirely), or will only accept applications for a very restricted range of products, a bad credit mortgage lender will be quite open and detailed about what they are willing to accept. They are likely to spell out types of adverse credit events they will take into account, as well as the amounts involved and the time frames they occurred. An experienced bad credit mortgage broker will be able to use their expertise and knowledge to match the potential borrower to the suitable lenders for their case.

While it can be more difficult to secure a mortgage with a bad credit history, it’s certainly not impossible for all. Also, there are things you can do that could improve your chances of being accepted for a bad credit mortgage.

How to improve your credit for a mortgage:

 

  1. Consider doing these things now:
  • If you aren’t on the electoral roll, get registered.
  • Request copies of your credit report from the three main UK agencies.
  • Close any accounts you don’t use – e.g. store or credit cards.
  1. Next, do this:
  • When you get your credit reports, check that the information they contain is accurate. If anything is wrong, get in touch to get it corrected.
  • Make a list of all your sources of income and outgoings, so you understand how money flows into and out of your household. Use this to work out a realistic budget, and stick to it.
  1. Longer term actions:
  • If you’re struggling with your budget, look at the figures again – maybe you haven’t allocated enough for groceries (for example) or you forgot about something.
  • Open a savings account and put something into it every month – no matter how small a sum. When you have a little bit extra – such as your ‘free’ council tax months – put that money into your savings account.

Take a look at our in-depth guide for more guidance on how to boost your chances of being approved for a mortgage with bad credit. For further information on bad credit mortgages, contact our team of specialist brokers. They have a wealth of experience of securing mortgages for people with a history of bad credit and have access to exclusive deals you wouldn’t necessarily find on the high street.

With so many variables, it’s impossible to give an exact figure for how much more than a conventional residential mortgage a bad credit mortgage will cost. The main factor to drive down the cost of the mortgage will be a high deposit. If you can provide upwards of 25% instead of the typical 5%–10%, then you may be able to access deals with more usual interest rates. The only way to find out for sure is to talk to one of our specialist team, who will quickly be able to outline your options.

Finding yourself in the position of needing advice on applying for a mortgage with bad credit is probably not something that you had planned for. However, it may put your mind at rest to know that if you do find yourself in this position, you are certainly not alone and join the great number of people who regularly contact us for exactly this service.

Almost all search engines and best-buy mortgage tables cater to those who fit the standard mould when it comes to applications, and tend to be far less relevant to people needing specialist advice in applying for a home loan. You can spend a huge amount of time and energy trying to research all the options available to you by yourself – and experience a great deal of frustration when it seems that nobody will be able or willing to provide a loan that meets your needs – but still not discover the products and rates offered by more specialist lenders who take a more flexible approach to borrowers with bad credit.

Speaking to an adviser who is an expert in the bad credit mortgage sector should be of invaluable assistance in securing the right mortgage to meet your needs. They will be able to assess your situation and use their knowledge of the range of lenders available (and their varying criteria), as well as the prevailing trends in the market and any new offers that have recently become available, to find the most appropriate scheme for your individual circumstances.

In many cases, the most suitable deal may even be at a rate offered by a standard high street mortgage provider from the outset, but where this is not possible and only a more specialist rate is on offer, a specialist adviser can work on a plan to get you in a more favourable position later during your mortgage lifetime, possibly through switching your mortgage once your adverse credit items have slipped off your credit record.

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