Mortgages for people with bad credit rating
Some people in Britain do not meet high street lending criteria and will experience difficulty getting a mortgage because of a poor credit rating. Are you one of them? Whether you're a first time buyer, looking to move to your next home or want to remortgage, a specialist lender may offer you the key to unlocking the mortgage you need.
Past financial problems affect many
Many people struggle to pay bills and other commitments at some point during their lives, often in times of turmoil such as redundancy, bereavement or divorce. In some cases individuals can get a blackmark against their name, because they have been involved in a legitimate dispute over a bill.
If you have missed a payment (defaulted) on a previous mortgage, personal loan, hire purchase or credit card agreement or failed to pay a bill, your credit file may be adversely affected.
Most lenders will automatically run a credit check on anyone applying for a mortgage and something as minor as a missed payment on a book club could mean you have a poor credit score and cause your mortgage application to be declined.
If you have bad credit history such as CCJs, previous mortgage arrears, defaults on loans or credit cards, have been declared bankrupt or have no credit history, you may experience difficulty when applying for a mortgage with a high street lender.
If you have been turned down for a mortgage previously or feel that a standard high street lender may decline your application, all is not lost as there are a small number of specialist lenders who provide mortgage solutions for people who have experienced previous financial problems.
A professional mortgage advisor will be able to assist you as they'll know which lenders will be sympathetic to your situation and will give you impartial advice on what's the best bad credit mortgage options for you.
Simply complete the enquiry form to get a FREE no obligation quote.
For traditional lenders it's often your score that matters most
For most traditional banks and building societies, the decision they make in terms of who to lend to is inextricably linked to the applicants credit score. Lenders use credit scoring to identify the degree of creditworthiness in the applicant. The lender looks at the information you provide in your application while scanning your credit report looking for anything untoward. This computerised automated process using data provided by credit reference agencies such as Experian, Equifax and CallCredit will output a number, your credit score. Borrowers are typically pigeonholed into categories. Those borrowers with the highest scores are often referred to as super prime or prime and will have the best chance of success while those with the lowest are termed as near prime or sub prime. Criteria does vary from lender to lender, but in most cases a history of bad credit will be damaging to your chances of racking up enough points with the likely outcome being rejection.
Ultimately the decision rests with the lender as each have their own methodology and definitions as the profile of an ideal customer. Credit reference agency Experian suggests there are 15 elements that make up a credit report and warn a high score is no guarantee, pointing out that 'even people with an Experian Credit Score of 999 can be rejected for credit'.
Specialist lenders look beyond credit scoring
When you have clearly defined rules as to your target customers, credit scoring is an efficient way of making consistent decisions. But many specialist lenders adopt a more refined approach, using skilled underwriters to make lending decisions, rather than automated scorecards. This more flexible decision making means they might say 'yes' while others will say 'no'.
Some specialist lenders take the view that credit scoring penalises certain types of borrower, those people with minimal credit history, those who move regularly, people who aren't on the electoral roll, those with limited trading periods, those looking to work past state retirement age, and of course those with a history of bad credit. These borrowers will typically have a low credit score but they may actually make credible and trustworthy borrowers. Where specialist lenders shine is getting to know and understand the complete customer profile, asking questions where clarification is needed.
The specialist lenders which lend to people with complex circumstances such as a poor credit history, look beyond the crudeness of a score to establish whether the borrower in front of them has overcome their difficulties and is in a position to comfortably afford a mortgage.
If you have a history of bad credit or have complex personal circumstances you will almost certainly benefit from the help of a specialist lender rather than a traditional credit scoring lender.
Supply of bad credit mortgage options improves
A 2014 survey by MoneySuperMarket.com revealed that one in ten people in the UK had been served with a County Court Judgement and that 2.2 million brits had missed a rent or mortgage payment in the previous 12 months. That's a significant number and it reinforces the importance of having lenders in the market that are able to underwrite an application on its individual merits and, where a customer has demonstrated an improved financial position, treat these issues as financial problems of the past, not necessarily reflective of their future ability to pay the mortgage.
The number of mortgage lenders catering to the needs of those with less that perfect credit history has certainly improved since the years immediately following the global financial crash in 2007. Back then, borrowers were left with scant choice as lenders withdrew in their droves. Many lenders recoiled from offering what were known as sub prime mortgages as these were seen as being a fundamental contributing factor to the global economic catastrophe.
Ten years on from the financial crisis and the appetite amongst lenders towards non standard borrowers has improved with a few new lenders emerging offering a range of mortgages for borrowers with poor credit histories. Although the landscape is very much different compared to pre-credit crunch, providing you are not an individual with a habitual debt problem, have a good sized deposit at your disposal and a good income, help should be available.
Contact us for impartial advice
As a mortgage broker with extensive experience in assisting people with previous credit issues, we are a good first port of call for anyone looking to get a mortgage who believes they have a poor credit rating. We are well placed to advise you and have access to high street lenders as well as specialist lenders who have mortgages designed for creditworthy borrowers who may fail a standard automated credit check. Contact us for a FREE no obligation mortgage consultation.
One of the first steps is to ascertain your current situation and a key source of information is your credit report. If you haven’t done so already, you need to obtain your credit report and see what it contains. Providers such as Noddle offer a free report and others like Equifax and Experian provide a 30 day free trial. For some, a credit report can reveal a multitude of sins wreaking havoc with their credit rating, while for others it could be a relatively minor misdemeanour. This valuable information will assist the broker in assessing your situation and will help determine where best to place your mortgage application.