Adverse Credit Mortgages Made Simple
Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon.
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Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon.
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Adverse Credit Mortgages Made Simple
What is an adverse credit mortgage?
An adverse credit mortgage is a mortgage or a set of criteria that is specifically designed to help people that have had credit issues. This could be certain mortgage products from a lender, or it could be a lender who specialises in this type of mortgage. The type of mortgage you will need will depend on how “bad” your credit is. There are some minor little slip ups that may well just see you with a high street lender but the more payments you have missed and the worse your record is then the more specialist we will need to go.
What is adverse credit?
The term adverse credit or just bad credit really refers to the conduct of your credit agreements. You will be considered to have adverse credit if you have missed some payments or been late paying any of your agreements. These could be for things like loans, credit or store cards, utility bills, mobile phones and even mortgages. The more payments you have missed or the further behind you have got, the worse your position is and the more specialist we will need to go to find a lender to help.
Can I get a mortgage with bad credit?
In most cases the answer is often yes. That is of course as long as you have enough deposit and are prepared to pay a higher rate. Mortgages for bad credit tend to come with certain other criteria. This is because the risk for the lender is increased, from their point of view you are less likely to maintain your mortgage payments than someone with a squeaky clean credit history, and so they will take that risk on you but need to ensure if they have to take the property and sell it, they will get their money back from the sale. So, you will generally need a little more deposit than the 5% minimum but you may well be surprised at what is achievable. We have helped people with situations ranging from a few missed or late payments on unsecured credit right through to defaults, county court judgments and debt management plans. Also, the more recent your credit problems are, the more we may struggle. If you have missed payments in the last 3 months this will have much more of an effect than if it was 2 years ago.
How does credit score affect your mortgage?
Your credit score does have an impact on your chances of getting a mortgage but in saying this, it is important to distinguish between credit score and your credit report. Your score is a number given by the credit reference agencies that is made up of various factors including your conduct and history, electoral register, how much credit you have and how it has been repaid. The actual report is more important for the mortgage lender, this shows how you have actually managed your debts and if you have repaid everything on time.
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How much deposit do you need if you have bad credit?
Again, this will depend on your exact situation so one size will not fit all. But, generally speaking if you have had a few missed payments in the last couple of years then you may be able to have a relatively small deposit. If though, you have more serious issues such as CCj’s and defaults then this will mean a larger deposit is needed.
How do you know if you have bad credit?
It is not always well known to the people we speak to that they have adverse credit. Sometimes these things can slip through unnoticed until you go to take out some credit. This could be some bills that have been missed when you have moved or maybe a direct debit that got cancelled too early or by mistake. The best way to check for yourself is to download a copy of your credit report. This will show you exactly who you have credit accounts with and how those accounts have been managed.
Does being on the electoral roll affect your credit score?
Sounds odd doesn’t it but yes it does. If you are on the electoral register it makes it easier for lenders and credit providers to find you and for them to see you are who you say you are. So having this ticked off will suddenly see your score increase.
What is a CCJ?
A county court judgement is an order or a decision made by a court to confirm that you have not paid someone or you have not kept up your repayments. In this case the court will order you to pay the amount owed by a certain date. CCJ’s can be for all sorts of things unfortunately from credit agreements through to unpaid bills and fines such as parking fines. The provider will take you to court to try and get their money back if you do not pay it or do not respond.
What is a default?
A default is slightly different, these are issued on credit commitments that have not been paid or that have gone a certain period of time without the full payment being made. A default on your credit file shows that you owed money and did not pay it back within the agreed term. You will have a marker placed on your file for each missed payment and then eventually after a certain amount the provider will register that the loan has not been paid.
Why use a mortgage broker?
Getting a mortgage with adverse credit is a tricky business. There are lots of lenders to consider and each of those have their own criteria. Choosing the right lender for your exact situation can be very complex. In these cases it generally will not be the lender with the lowest rate that will be best for you, there will also be lenders to look at who do not deal directly with customers, particularly with adverse credit.
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