How to get a Bad Credit Mortgage
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 mortgage with bad credit, starting with the basics.
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.
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.
Longer term actions:
- 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.
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.
How much will a Bad Credit Mortgage cost?
A mortgage with bad credit is usually more expensive because the lender will price their products accordingly in their assessment of risk. As well as potentially costing you more, you might find the amount they will consider affordable for you to borrow is less than some other lenders.
What issues have an impact on cost?
Lenders take a number of issues into account, including:
- The type and number of adverse credit events on your credit report: some have a bigger impact than others. For example, a lender might not be too concerned if you occasionally paid your mobile bill late, whereas if you have defaulted on a mort-gage, that will be viewed as a more serious issue.
- How old adverse events are: credit information stays on your file for six years; gen-erally speaking, the older the events are, the less impact they will have.
- Whether old debts have been settled.
- The LTV of the mortgage: this is a measure of security for the lender. If they lend, say, 70% of the value of the property rather than 90%, should something happen to prevent you keeping up your payments, they have a better chance of getting their money back.
A lender will look at the big picture shown by all the information you provide and make a decision based on the overall strength of the application. As well as the above, this can include issues like whether you’re on the electoral register, how often you’ve moved house or changed your job, and how much debt you have in relation to your income.
What will it cost me to get a mortgage with bad credit?
For advice tailored to your unique circumstances, speak to one of our experienced bad credit mortgage brokers. An initial enquiry costs nothing but could save you money.
What causes bad credit?
Technically, there’s not such a thing as a “bad credit” score. This is because credit scores are calculated in different ways by the UK’s credit reference agencies. Your score is not what will impact your final decision; it is the different information that makes up your credit file.
Here are some key contributors to a ‘bad’ score:
Not being registered on the electoral roll
Any previous court records such as CCJs, IVAs and bankruptcies
Previous history of missed payments/defaults
Wrong previous addresses on credit report
Frequent credit applications, especially declined ones
How much you owe and what you are currently repaying
Any payday loan information
You can take steps to improve your own credit score, which will make getting a mortgage easier, but not all lenders will use this data in the same way. Your circumstances will be viewed and dealt with differently by each lender, but one of our experts can help you find the best potential mortgage for you credit history and help walk you through the steps to look to get this arranged.
Black marks on your credit history:
Debt Management Plan
Missed or late payment
But it is often not as bad as you think – those people who have had credit issues in the past could still get a mortgage, and we specialise in helping clients who have almost given up hope.
Find out if you can get a mortgage, contact us now and we shall establish if a mortgage is possible, or if not now, when you will be eligible so you can plan ahead.
How do you know if you have bad credit?
If you are being chased by debt collectors, or receiving letters from credit card companies, it will be clear that your credit history is not as strong as it could be. For some, however, the first real sign they have a bad credit rating is when they are declined a mortgage by a high-street lender. This may be a surprise if you have not had a long period of a credit history (or no credit history at all), but for others it may be less of a shock, simply because they may be aware of missed payments or any court actions in the past.
How Bad Is My Credit Score?
In the UK, most people have three credit scores, one from each of the credit reference agencies – Experian, Callcredit and Equifax – who collect data on people’s financial behaviour. Lenders will access one or more of these agencies when conducting a credit check. Do note, however, that a lender will use its own assessment of your credit rating rather than that given by any of the agencies.
How Do You Get Your Credit Report?
Being able to obtain your own credit report has never been easier, and we would always strongly advise people to take a proactive approach to this, especially when they are look-ing to get a mortgage. Obtain your free credit report
How can we help?
At Transparent Mortgage Services we work with several lenders who specialise in bad cred-it mortgages. We will help match you with the right lender, take care of the application it-self and advise you on anything else you can do to make your application successful.
What Else Can I Do to Secure a Mortgage?
The best thing you can do is help show you are less of a risk to lenders. Having existing debts is not necessarily a bad thing, provided you are able to demonstrate your ability to continue to pay the monthly payments due in the future.
The next step is getting in touch with one of our team. Do not be put off by any possible negative previous experiences with other brokers or high-street lenders; we have a wealth of experience in dealing with mortgage lenders who are more sympathetic towards our clients, who may have experienced credit issues in the past. We maintain excellent relationships with these lenders to give you the best possible chance of obtaining a mortgage with bad credit.