A look at adverse and bad credit mortgages

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bad credit mortgagesHere we take a look at bad credit mortgages, also known as adverse credit mortgages and what your options are for getting a mortgage if you have bad credit and what you can do to improve your prospects of a successful application.

Getting a mortgage can be very tough when you have a bad credit rating and negative factors such as defaults, County Court Judgments (CCJ’s), individual voluntary arrangements (IVA’s), debt management plans or a bankruptcy on your record – but it’s not impossible and the first step to a successful application it to use a whole-of-market, impartial mortgage broker like ourselves.

The reason why your bad credit mortgage success is higher with an Independent Whole of Market Mortgage Brokers such as ourselves is that we are not limited to any one lender, groups of lenders. We are not tied to anyone which means we can research and source from the whole of the UK mortgage market to find the right lender and the right product for your circumstances.

Life’s Surprises

Whilst life can be a source of great celebration it is a sad reality that difficult life events such as redundancy, unemployment, bereavement, divorce and illness happen and when they do occur such difficult life events often have a profound impact on our finances. So whilst your credit score may take a hit it doesn’t mean you can never get a mortgage again as we have secured bad credit mortgages for people with fairly recent credit problems.

There is hope as the mortgage market for poor credit has developed and expanded greatly in recent years.

The reality is that each persons circumstances are different but at Mortgage Success we will be able review your case and explain the likelihood of success and what factors may be helping or hindering your chances of a successful application.

Whilst we have sourced bad credit mortgages for discharged bankruptcies, defaults and people who have finished an IVA as soon as 12 months before the mortgage application, it should be noted that whilst the credit score and history is an important factor of the application it is just that, one element, and your employment, income and affordability plus the size of your deposit all play a role in determining your risk profile to a lender and the better these other elements are, the less importance adverse lenders will put on your poor credit history, particularly the older those negative factors are.

Whilst some lenders are more lenient to one or more of these factors we should point out that whilst you could get a mortgage even if you have completed your IVA some 12 months ago, but if you also don’t have a deposit, cant afford the mortgage payments and have only been back in work for a month then whilst a recently completed IVA may not stop you getting a mortgage, the combination of the other factors would in that scenario be a very difficult case to put forward so we would give you our advice and an indication (based on the market now) of when you could be successful.

Can you improve your chances now?

As we just touched on, if you have a bad credit history and it is in the past but less than the 6 years it takes for most things to come off your credit file, the further away it is the better obviously but they key to success is to focus on the positives which help mitigate that poor history and the single biggest thing we can advise if you have some poor credit still on your file, is to pick up the phone and give us a call.

By knowing how bad your credit history is together with the positive factors such as income, affordability and deposit and having access to the whole UK mortgage market we can very quickly narrow down the list of possible lenders that may consider your mortgage and in most cases we may be able to speak to the account managers and underwriters with those lenders to get some feedback before we formally submit the application.

Will my interest rate be higher?

The short answer is yes as the rates reflect the circumstances at the time of your application but this depends on how strong the application is so an IVA 4 years ago with an otherwise strong application and a 30% deposit is a lot easier to obtain a rate closer to the high street than an IVA 12 months ago and a 25% deposit.

We recently got a successful adverse credit mortgage through were our customers were discharged from their IVA for 3 years and we got them normal high street interest rates socthere is hope and it pays dividends to get in touch.

What should I do next?  

Even only becoming an ex-bankrupt or finishing an IVA in the last year or two doesn’t mean an automatic no to a mortgage these days and there are always new adverse and bad credit mortgages coming on to the market and changes in the way that some lenders will look at the issue so give Mortgage Success, the Manchester Mortgage Brokers a call, as we are always happy to have a quick chat with no obligation to proceed