What is a Bad Credit Mortgage?
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What is a bad credit mortgage?
There is no exact product as a bad credit Mortgage.
A bad credit Mortgage is a name given to mortgages provided by specialist lenders to people with a Bad Credit History.
Due to the higher risk of providing a Bad credit Mortgage the rates and initial charges may be marginally higher.
However, you will find these Bad credit Mortgages are generally a 2-3 year fixed. During which, if you are paying your mortgage and any other credit arrangements on time, your credit score will start to repair itself. So after the fixed rate expires your broker should be able to Remortgage you back onto a competitive rate. Making them a stepping stone to getting a ‘normal’ Mortgage.
Having a Mortgage refused is Frustrating, Disheartening & can sometimes bring a complete halt to your plans.
However, we specialise in getting people bad credit mortgages. We have years of experience in finding the very best deals for our credit impaired or adverse credit clients, regardless of their credit history.
There are many reasons why you could have been refused a mortgage. One of them being a low credit score, but having a low credit score can be caused by loads of different factors.
Why have i got a low credit score?
You have had a CCJ or default registered in the last 6 years
You have a Bankruptcy, Individual Voluntary Arrangement (IVA), Debt Relief Order (DRO) or Debt Management Plan showing on your credit file
You have missed or made late payments recently on your credit agreements.
Your current level of debt compared to your available credit. Most lenders do not want to see you using more than 25% of your available credit on a continuous basis.
You have an association with somebody who has a Bad credit history (Spouse or Partner)
You’ve made too many credit applications in a short space of time in the past six months, resulting in multiple hard searches being recorded on your report
You’re not registered to vote on the electoral roll (this is used for proof of your address and identity)
There are mistakes such as incorrect addresses or other errors on your application form
Not having a credit history can have a negative impact on your credit score in just the same way as late payments. This can happen to young people who have not taken out credit, whilst this very admirable, A Lender would prefer to lend to somebody who has a history of borrowing and a history of paying. This history helps them to calculate the risk and decide if they are comfortable with your application.
Check your credit score below
Berks & Bucks Finance had a commercial arrangement under an affiliate programme with Check my File and is remunerated for referrals
Is it possible to get a mortgage with a bad credit score?
YES IT IS!
There are a Group of specialist Lenders that are looking after this forgotten area and have the products to help.
These lenders don’t just use computers to assess the application and credit score, they still retain the human touch and will get an underwriter to manually look at your case and depending on the level of Bad credit, look to provide you with options.
How to get a mortgage with bad credit?
The process for getting a Mortgage with Bad credit is the same as Getting a Mortgage with Good Credit.
However, in a Bad Credit Application, it is important to concentrate on one Key area, The Credit Report. So…
- Get a full copy of your Credit Report – A lender will not be interested in your Credit Score. We have seen applicants with Good Scores refused a Mortgage because they had a Missed credit card Payment 2 years ago, so by obtaining your latest credit report you will be seeing the same information as the lender will see.
- Make sure all the information is accurate and if there are any errors or inaccuracies then these will need correcting before you move forward to reapply.
- Check through your Debts and make sure they are reflected accurately. All lenders will go by the debts showing on your Credit Report and not by what you write down on the Application.
Why use a bad credit broker?
- A lot of Bad credit lenders are not well known and some only work with Brokers.
- With over 20 Lenders and 100’s of products, working out if they’re likely to approve your application can be complicated and confusing.
- Being Bad Credit Experts, we know the market, including which lenders offer bad credit mortgages, their criteria and specialities. So, when we have assessed your application we will only take it to the lenders where there is a very good chance of an approval.
- You need to make sure your first application hits the Bulls eye, so make sure you’re dealing with a broker who is accurate and knows what they’re doing.
Who is the best lender for bad credit?
To be honest there is no best lender for Bad credit. There is however a group of Specialist lenders that have their own unique selling points and areas that they specialise in.
- Some lenders will only look at Applications with Mild Adverse e.g. a default registered 3 yrs ago
- Some will look at Medium Adverse e.g. a CCJ registered in the Last 12 months
- Whilst some will consider applications from Very Bad Credit e.g. Bankruptcy order satisfied in the Last 3 years
So its more of a case of what’s the best Mortgage Company for your Situation… Luckily we have access to Mortgage companies that will work with Bad credit and Very Bad credit.
Joint Mortgage Application one with Bad credit
In certain scenarios, only one of the applicants will have a Bad credit record. In this case some couples will try and apply for a mortgage in the sole name of the Good credit Applicant, however when the lender undertakes a credit Check they could see a Financial Association with the Bad credit Applicant and refuse your case.
So, if you are Married or Cohabiting and applying for a joint Mortgage it’s always best to declare
- Your credit history
- Your relationship
The majority of lenders prefer married or co-habiting applicants to take joint mortgages, with both applicants going on the title, thus providing more security for the lender.
Call us for a preliminary Chat, our advisors can then assess your situation to provide you with accurate advice and only approach the most suitable lenders.
Mortgage with Bad credit but large down payment
Generally, when applying for a mortgage the amount of deposit will have a bearing on the
- Interest Rate offered
- Application Approval
For instance, having a large deposit of around 40 – 50% or more will offer more incentive for lenders to say yes and they could offer you a lower interest rate.
If you have a smaller deposit, such as 10 – 15%, then lenders will be more reluctant in offering you a mortgage and if agreeing could charge a higher interest rate.
This is the same for Bad credit Mortgage
So having a Large Deposit will be help your bad credit application.
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our Mortgage Butler service
Help you to collate all of the documents you will need to apply for a mortgage
Complete and submit your application
Handle all the enquiries by the Mortgage Lender
Liaise with your Estate Agent
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Keep in touch with you on a yearly basis and help with your future needs
