Bad credit isn’t always the end of the world when applying for a mortgage. An adviser can tell you in minutes what your eligibility might be with just your credit report.
If you have experienced financial difficulties in the past, its important to know that it is still possible to obtain a mortgage with bad credit. Whilst it can be often be more difficult to get a mortgage with a history of bad credit, it’s not impossible as there are things you can do to improve your chances of being accepted, and there are specialist lenders out there who solely deal with clients who have adverse credit.
In short, your previous financial history shouldn’t necessarily define your plans to own your own home.
Your home may be repossessed if you do not keep up repayments on your mortgage
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Get accurate mortgage advice based on a thorough credit report, ensuring lenders offer the best options for your financial profile.
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Obtain a detailed credit report to ensure tailored mortgage advice based on your financial standing and history.
Bad credit, also sometimes referred to as ‘poor credit’ or ‘adverse credit’, is used to describe the financial situation of a borrower who has previously experienced financial difficulties. Missed payments, defaults, debt management plans, CCJs, IVAs, bankruptcy, frequently changing address, or not being on the electoral roll can all impact a poor credit rating. A good place to start is by obtaining a credit report so you can see your credit file and fully understand your financial situation.
Often lenders who offer bad credit mortgages have a higher interest rate in comparison to typical lenders, and they might also require a bigger deposit. This is because they would see you as a higher risk borrower.
Working with a specialist mortgage broker to handle your bad credit application is often the best way to maximise your chances of finding the most suitable deal available to you. Millennium Mortgage’s team of CeMAP qualified specialists are experienced in working with specialist lenders on applications involving bad credit, and you also get the benefit of a personalised service designed to make the whole process go as smoothly as possible. Our specialist advisors can help ensure the application process is as straight forward as possible by:
Our specialist brokers will carry out the mortgage application process for you. We can ensure that all the correct documents and forms are completed correctly, and on time. We are able to use our vast experience to navigate the mortgage market for you, to provide you with the most appropriate deal.
We are specialists in the bad credit mortgage sector. Often application criteria can vary quite significantly between lenders, but we know what they are looking for and whether they are likely to accept your application.
One common obstacle facing applicants with a poor credit history face is passing the lender’s underwriting process, which is where the lender looks at your financial circumstances in detail, and is often the stage at which an application is declined. By working with the team at Millennium Mortgages, we are able to work with lenders before this stage in order to flag any issues before the application is submitted, giving you the time to address any problems, and us the information needed to approach the right lender. This is why it is important to have an up to date credit report so we can get the full picture of your financial situation.
Here at Millennium Mortgages we have access to a wide range of lenders, which means we can source mortgages from both traditional high street and more specialist lenders for bad credit applications. Bad credit mortgage lenders often only work with brokers directly, and therefore aren’t available directly to customers, so by using the services of specialist mortgage brokers you are maximising your chances of being able to secure a mortgage.
Although there there aren’t technically products specifically for those with bad credit, there are lenders that are better suited and used to lending to people with a bad credit score or low credit. Debt is a lot more common than you might think, and although a having bad credit rating isn’t ideal, it’s not the be-all and end-all. There are a lot of lenders that have mortgage criteria that allow for a less than perfect credit history, and your mortgage adviser will be able to advise on the most suitable product for you if it’s affordable in relation to your income.
You’ll be required to put down a deposit for a bad credit mortgage. The lender might require you to raise a larger deposit, but that’s not always the case. The amount of deposit you’ll need can be affected by lots of different factors and if you decide to work with a bad credit mortgage broker, they can work out how much you’ll need for various lenders and compare which one has the most appropriate deal for you.
To put yourself in the best position to get a mortgage it is important to fully understand your financial situation, especially if you know you have a bad credit history, therefore getting an up to date credit report is vital. There are a number of credit reference agencies that lenders use to assess your finances, and we always recommend Check My File as this pulls together information from all the main agencies.
Obtaining a credit record from a credit reference agency will highlight any credit issues, and will also flag if you have a low credit score, if you’ve had any late or missed payments, and what outstanding debts you have.
Credit reports show your past six years of credit activity and regularly give you an updated credit score. Most lenders will still offer a mortgage with bad credit, depending on the severity of the bad credit history and when they occurred. Lenders will often be more accepting if the impairment occurred three years ago, instead of 12 months ago, so by applying for a mortgage with credit issues as far back as possible will maximise your chances of success.
It is worth noting that if you have had a recent missed payment on a previous mortgage, this is classed as a red flag to most lenders, as missed mortgage payments when applying for another mortgage isn’t ideal. Many lenders have different criteria on this though, so always speak to your mortgage broker to see what can be done in your personal situation.
When a broker looks at your credit profile, they’ll decide based on the information they have what kind of mortgage lenders might be available to you. With poor credit scores, it may not be possible to use a high street lender, in which case the interest rate is likely to be higher.
Having an adverse credit score can sometimes mean that fewer mortgage lenders will be willing to lend to you. Many mainstream lenders won’t accept people who have bad credit, so this might mean you will need to work with a mortgage broker to find a specialist bad credit mortgage lender instead. Your experienced mortgage advisor will be able to approach suitable lenders who offer adverse credit mortgages on your behalf, and will also be able to work through their lending criteria to ensure you meet their requirements.
How much deposit you may need can vary between most mortgage lenders. Some lenders will accept a 10% deposit depending on the severity of the adverse credit history, but there will be more mortgage deals available with a larger deposit, and may enable lower interest mortgage rates.
Applying for a mortgage with bad credit lenders is the same process as any other normal application, the only difference being that the broker and lender will often require a bit more information. Don’t be surprised if you’re asked to explain about your poor credit score, but often lenders are understanding if there were extenuating circumstances.
Everyone at Millennium Mortgages is able to guide you through the application process to help you secure the finance you need with the lender. We can act as an intermediary between the two of you to help take some of the the stress away and make the process as seamless as possible.
To help with a successful application, you might need to supply some documentation to show your current financial stability. Most mortgage companies will need to see your past three months bank statements, and any credit agreements for credit cards, loans and other types of finance. If you have had a CCJ, IVA, or Debt Management Plan confirmation that these have been satisfied will also likely be requested. Lenders will carry out their own credit check on you to look at your credit files, and will also want to check your employment status, so payslips may often be requested too.
Even if you do have a history of bad credit, there are still many options available to you. The team at Millennium Mortgages are hugely experienced in dealing with applications for a specialist bad credit mortgage, so get in touch to find out what options are available to you; our experts are always happy to help!
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
For our advice services, we will charge a fee of between £199 and £999, payable at receipt of mortgage offer. (Range of fees available on request) Our typical fee is £399. We will also be paid commission from the lender. We will provide you with full written details of the basis upon which we will be paid for the Services we provide. This could include a payment from your mortgage provider and/or a fee we will charge you. We will not commence any substantive work for which we will charge you a fee until we have agreed the applicable fee with you and such fee is recorded in a binding Client Fee Agreement. We will not exceed any limits on any fee set out in the Client Fee Agreement without your Agreement. We will advise if it is appropriate to pay fees or charges in connection with the mortgage up front as opposed to adding them to the sum advanced under the mortgage contract. We will not commit you to an application for a mortgage where a fee or charge of any kind (receivable by our Firm or another party) is to be added to the sum advanced, unless you have made a positive choice to add the fee or charge to the sum advanced.
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Millennium Mortgages Limited is an appointed representative of PRIMIS Mortgage Network, a trading Name of Personal Touch Financial Services Ltd. Personal Touch Financial Services Ltd is authorised and regulated by the Financial Conduct Authority. The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore applies to consumers based in the UK.
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