Adverse Credit Mortgage Brokers
Bad Credit is considered a dirty term; one solution could be an Adverse Credit mortgage (also known as a subprime mortgage), but these can come at a higher price.
The benefit of an Independent Mortgage Broker is that we understand the mortgage market and which lenders can be more flexible than others. The ideal solution is to find a prime mortgage rate before considering a “bad Credit” mortgage! As Adverse Credit Mortgage brokers, we may have a perfect solution for you.
Many borrowers are oblivious to the fact that there are historic credit issues against their creditworthiness. The majority of cases are initially identified when consumers apply for credit, such as a mortgage.
Bad debts can be formed of County Court judgments or a historic default. An example could be missed payment(s) from a past address, and you were not made aware – because you moved, so how would you know?
We strongly recommend looking at your credit file. Three main credit reference agencies can lodge bad debts against your credit file. If you go to www.checkmyfile.com you can take advantage of a 30-day free trial and get to see if there is anything there – this site is excellent because it will show all three credit agencies.
If there are credit issues, there will likely be solutions available. For lighter issues, which could be historic, we know which lenders will ignore them, meaning you could still get a market-leading rate. If there are worse issues, then there are specialist lenders whom we can speak to and find out what terms are available to you.
The place to start is by conversing with one of our friendly experts. The form opposite will put you straight in touch with us – or call us?
Alternatively, you can complete a basic form so we can send you a personalised illustration. You can find this here
Bad Credit
What Makes Us Unique
- We will never charge a broker fee
- Whole of market advice
- Access to exclusive rates often not available on the high street
- Immediate appointments available
- Use us online via Teams or over the phone
- At times which will suit you
- Hassle-free and stress-free
What Is a Bad Credit Rating?
A bad credit rating in the UK typically falls below the average credit score threshold of 660 (this can vary depending upon the lender’s criteria), as determined by a credit score check. Because of their poor credit, someone with bad credit can find it extremely difficult to obtain a mainstream mortgage with a high street lender. This is mainly due to lenders wanting to minimize their loan risks and ensure that debtors can repay on time. The good news is that there are options available to most consumers, but expert advice and market knowledge are essential.
Aside from a poor credit score, a lender will look at your credit file. Suppose you have County Court Judgements, missed payments and loan arrears. In that case, this will reflect on your credit score and be taken into account separately from your score as part of the lender’s stringent underwriting protocols.
Can You Get a Mortgage When You Have Bad Credit?
Obtaining a mortgage or remortgage with bad credit is possible, but it is more complicated than having good credit.
Because of the risks associated with lending to someone with a poor credit history, banks, building societies and other lenders may require you to pay higher interest rates and offer less competitive features.
Some specialist lenders offer specific mortgages for a consumer with poor credit. However, they may require more significant deposits and additional underwriting criteria before approving you for a loan. A rule of thumb suggests the worse the credit, the higher the interest rate to reflect risk.
Even if you meet the criteria, a mortgage lender will undertake comprehensive underwriting checks because lenders want to ensure they can recoup their money should any payments be missed or delayed.
What Credit Score Do You Need for a Mortgage?
Typically, a minimum credit score for a mainstream mortgage in the UK is above 620, depending on the lender. Those with higher credit scores of 700 and above generally have a better market choice assuming a clean credit history. Those with the highest credit score should have no issues securing the best mortgages depending on other criteria, such as income.
According to Experian’s Credit Score Calculator, applicants with a credit score of 800 or higher are likely to qualify for the best rates when applying for a mortgage. Lenders may also consider other factors, such as previous payment history or debt-to-income ratio, when assessing an application for a mortgage loan.
Can You Get Mortgage with Default?
While it may be difficult, getting a mortgage with a default is possible. To apply for a mortgage with a default, borrowers must meet specific criteria and prove that they have taken steps to address their debt problems or have a suitable explanation in the hope an underwriter can take a view on the circumstances surrounding the default.
An extensive history of defaults on credit cards or other types of loans can make it much more difficult to obtain finance. Lenders are likely to be wary of lending money to someone who has had previous issues with paying back their debts. Those who do manage to secure mortgage finance with a default will generally face higher interest rates than those without one depending upon circumstances.
What Is County Court Judgement (CCJ) And How Long Does a CCJ Stay On Your Credit File?
Generally, a County Court Judgement (CCJ) is a court order made if you don’t repay debts on time. It is issued by the court when lenders take legal action against borrowers who have failed to make payments. This includes credit card debt, utility bills, and even rent arrears. A CCJ will stay on your credit record for six years and can significantly damage your credit and your chances of getting other forms of credit. If you receive a CCJ, it will be recorded immediately to the Registry Trust and visible to all the lenders you apply with in the future, as it will show on any credit search against your name and address. This results that any enquiries you make into borrowing money or products, such as insurance or mobile phone contracts could be declined due to the CCJ being present on your file. In some cases, if you can pay off the full amount of debt within one month of receiving a CCJ, then it will not appear on your file at all. However, if this isn’t possible, then a CCJ can have long-lasting implications for six years, leading to difficulty when seeking future credit.
Our advice to anyone who has received an order from the County Court is not to ignore it but to speak to the claimant (such as the lender) and work out a compromise before the matter goes to court.
Can You Get a Mortgage With an Individual Voluntary Arrangement (IVA)?
An Individual Voluntary Arrangement (IVA) is a legal agreement between an individual and their creditors to pay off all or part of the debt over a fixed period of time. IVAs are available in the UK, but it is essential to understand what they involve before applying for one.
An IVA will usually last for a minimum of 5 years and a maximum of six. The repayments are based on an individual’s disposable income, which means that the amount each month must be affordable and sustainable. During this period, the debtor will not be liable for any more interest or charges and is protected from legal action by their creditors.
With some lenders, it is possible to get a mortgage with an IVA in place. However, it will present difficulties because lenders may view this type of arrangement as high-risk. Getting a mortgage with an IVA in place can be complicated. However, it is still possible under certain circumstances, such as historical IVA, where you have demonstrated the ability to continue the repayments. It’s best to speak to professional advisors about your options or if you meet the criteria for being eligible for a loan while still paying off debts with an IVA.
Do Payday Loans Affect Your Credit?
Payday loans can significantly impact one’s credit score and ring alarm bells for underwriters at mortgage companies. They typically involve high-interest rates and short repayment windows, meaning it can be challenging for borrowers to make timely payments and maintain a good credit rating. Payday loans are considered high-risk and can lead to late payment fees, higher interest rates, and increased collection activities.
Using payday loans too frequently or having too many outstanding ones at once can further damage an individual’s credit score. The Consumer Financial Protection Bureau notes that when someone takes out multiple payday loans in quick succession, the borrower is likely facing financial distress, which can further damage their ability to manage money effectively.
What Is the Difference Between an IVA vs Debt Management Plan (DMP)?
IVA and Debt Management Plans (DMPs) are two common debt solutions available to individuals in the UK. An IVA is a legally binding agreement between the debtor and their creditors, while a DMP is an informal arrangement. An IVA can provide debtors with more immediate protection from creditors than a DMP, as the legal arrangements of an IVA put a hold on interest, fees, and charges from accruing. It also offers greater flexibility when it comes to restructuring repayments; for example, allowing for payment holidays or reduced payments.
DMPs are designed for unsecured debt such as credit cards and overdrafts and may not be suitable for other types of debt like mortgages. Because DMPs are informal agreements, there is no guarantee that creditors will accept them. Unlike an IVA which lasts for five years, a DMP can last indefinitely until the debt is paid off in full or renegotiated differently with the creditor.
How Can Our Bad Credit Mortgage Experts Help?
Conran Mortgage Experts understand that bad credit can present a challenge when it comes to obtaining a mortgage in the UK. We have extensive knowledge of the UK mortgage industry, and we use our Whole of Market expertise to ensure our clients have access to the best deals possible.
Whilst there is no guarantee of success, our team is dedicated to helping those with bad credit secure mortgages at the best rates the market has to offer.
We are well-equipped to handle all the paperwork required for mortgages with bad credit applicants, so you can rely on us at every step of the process. Our digital technology platform helps us track lenders’ offerings and ensure you get the most competitive deal. We believe everyone should have access to attainable mortgages regardless of their financial situation, and that’s why we do not charge broker fees – so there are no extra costs incurred while trying to obtain a mortgage with bad credit in the UK.