We see a lot of applicants who have credit issues, some recent some not so recent so how easy is it to get a mortgage with bad credit, but good income?
One of the things that surprised me when we started to specialise in Bad credit mortgages back in 2013 was how many applicants with bad credit also had very good incomes.
Typically there are 3 reasons for how people on good incomes have bad credit issues:
Youth/Nativity – By far and away the most common. Typically the bad credit was picked up in their younger days, possibly as a student or when they were just stepping out on their own and were possibly offered loans and credit cards by the banks which combined with youth proved to be a recipe for disaster.
Newly qualified or Promoted – Another common one is where your income started low and then you qualified or gained promotion after some experience and that brought with it some increases in income, good examples here are people in the IT industry or Legal profession. The debt could have been accrued at a time where your income was significantly lower as your started out in an industry and at the time you struggled financially.
Working away or abroad – The last one we see a little less often but it still crops us, is the applicant who is on a good income but works away from home or abroad a lot of the time. Therefore you may be missing post that comes in to say you have been late or gone overdrawn for example.
How can we help to overcome the bad credit when you have a good income?
We do the same thing that we do for all of our customers… We have a conversation with you. We find out what the issues were and what caused them, no judgement on our side, I am 99% sure we will have come across something similar before.
We then research the market and discuss your specific circumstances with our account managers. Lenders generally consider 3 basic things when assessing an application:
- Ability to pay the mortgage – With that they are looking at whether or not you can afford to pay the mortgage.
- Willing to pay – This is one of the places where your credit history will be assessed. If you were able to pay historically but did not, that is likely to go against you.
- Likely to pay – Like the above, this is the other place where your credit file is used. In order to assess if you are likely to pay, they look at your credit history and your past payments.
Having the ability to pay with a history of not paying is not necessarily the end of the world. Part of the reason we like to talk to you about these cases is that there is no standard situation. The reason for the bad credit issues will vary (health issues, redundancy, family changes etc), the reason why you now have a good income will vary and so on. So we like to understand where you are now and where you were when the issues arose.
We then talk to our account managers and see what we can do for you before coming back with some potential options.
With the list above, the ability to pay is just as important as the willing and likeliness. Earning enough money to pay the mortgage but spending it elsewhere is no good to a lender. You could find someone who has only recently had a pay rise is looked on more favourably than someone who has always been a higher income earner.
The only way to find out if we can help is to give us a call, lets have a chat and understand your circumstances and we will give you an honest and realistic likelihood of being accepted and the likely rates available.