Pete is one of the adverse credit mortgage experts
Foreword by Pete: We receive more and more requests for information and advice on bad credit mortgages everyday, and it seems the demand for help is massive. There is a LOT of info online that is old and outdated, spam, and just plain wrong. As such, I have decided to compile all the most important information in one place, so anyone that wants a mortgage with bad credit in the UK will have a good idea about what is possible for them. We also offer a platform for visitors to enquire with the specialists and find out if they are eligible.
Working with Online Mortgage Advisor we arrange adverse credit mortgages everyday, and have loads of happy customers. This info is relevant for 2014 and, because lenders change their criteria regularly, it is frequently updated.
To find out what youre eligible for and which mortgages are best for you please make an application, ask us a question above, use the live chat or give us a call on 0800 103 2654.
Adverse credit mortgages
Mortgages for people with bad credit have seen radical change over the last 4 years, and continue to be in a state of flux post credit crunch as the lenders begin to find their feet. Bad credit mortgage loans are not as freely available as they were, but things have started to improve, especially over the last 6 months where several new lenders have returned to the market. The thing to remember is that each lender is different and just because you may have been declined by one, doesnt mean you wont be accepted by another.
The specialist advisors working with us have arranged mortgages for people with poor credit in the following circumstances:
- No credit history
- Low credit score
- Late payments
- Missed mortgage payments
- Defaults
- CCJs
- IVAs
- Debt management Schemes
- Reposessions
- Bankruptcy
- And mortgage customers with multiple credit problems
>>>Jump to: Bad credit tables for more info on exactly what types of bad credit are currently acceptable.
Poor credit mortgage applicants love us because the advisors we work with are always:
- Whole of market | with access to direct and broker exclusive adverse mortgages.
- Experienced | all advisers are highly trained, fully qualified, with a wealth of experience in bad credit mortgages.
- Knowledgeable | Friendly and ready to help already arranging the mortgage youre looking for everyday
How to get a mortgage with different types of bad credit:
The lenders decision on whether youll be eligible for a bad credit rating mortgage is all based around risk. The better you look as a borrower, the better your chances of acceptance. Below I outline the main factors that will effect your credibility:
Having no equity is an issue for lenders because if you dont repay the mortgage, they have to try and sell the property to get their money back, and if your loan was 100k and the house 100k (100% LTV) the chances of them getting full price and then covering their costs are nil. Infact, at 90k (90% LTV), the chances of covering all costs are slim.
With those looking to get a mortgage with bad credit history, if you only have 10% deposit or equity things are VERY strict and youll struggle with anything worse than small defaults (under £100) or one or two late payments.
With 15%, there are lenders available offering bad credit mortgage loans with much more flexibility, accepting late payments up to status 3 on a credit file at any time (even last month!), any number or value of defaults or CCJs if they are over 2 years old, and even bankruptcy if discharged for 3 years. If you have much more severe credit history issues than this, or the problems are within the above time frames, hen youll most likely need 20-40% deposit/equity.
Income
When you are getting a mortgage with bad credit, income rules are the same on normal applications, and it needs to be adequate to show you can easily afford the mortgage now, and into the future. Its not always based on the monthly payments, which is at times frustrating especially for those consolidating debts from £2000pm to £1200pm for example, where the £1200 is deemed affordable even though the borrower was keeping on top of the £2000! Usually, a borrowing limit of 4x salary is a common figure, so if you earn £20k, you could borrow £80k, although some lenders go to 5x, and at times more for higher earners.
Personal details
Personal factors effecting mortgages for poor credit criteria include: age, number of applicants, application type (right to buy/ family purchase etc) and more.
Assets
To get mortgages with bad credit, if you have other assets, such as equity in other properties, businesses, investments, savings, then these can show a lender you have other means to support yourself and their loan, should you fall into trouble.
Property details
Some lenders have different takes on non-standard property, so if youre buying or remortgaging a thatched cottage, concrete property, or maybe a property with an annexe, it can effect a lending decision.
For mortgages with a bad credit score, its important to remember that although most lenders will give you a score, some dont. The ones that do will limit your borrowing, your LTV or decline you if youd dont have a high enough score. But the specialist bad credit mortgage lenders that dont score will assess your credit file understanding that at certain times in life, things happen, and if they arent too severe or there is a good explanation, they may well approve your loan. Note: Mortgages with bad credit rating relate to the same thing as credit score.
Credit history (severity & date)
Mortgages for people with bad credit history are most impacted by the type, amount and date of the credit issues. The more recent the issue, the worse it looks, and the more serious the issue (in terms of £ and the type of credit the issue was with) the worse it looks. So, a mobile phone default of £100 is better than a secured loan default of £100. A CCJ for £5,000 is far worse than a CCJ for £50.
IMPORTANT: Bad credit history mortgages usually (with the exception to bankruptcy as you may also appear on the hunters register) relate directly to what is showing on your credit file. It may shock you to hear, but different lenders use different credit reference agencies. They may share their records to make sure their information is accurate, but often this doesnt happen. This can leave an interesting void, where one lender using Experian may decline you for a default that another lender using Equifax or Call Credit might not see.
Which credit issues will mortgage lenders accept?
These tables are based on experience and expert opinion regarding whats possible in the current market. Whether you are actually eligible for a mortgage depends on your personal circumstances. Yes or maybe = it is possible, it DOES NOT say that if you have any of these issues you are in any way guaranteed a mortgage, as applications are based on a number of factors and interpretations by lenders. Please only use this for reference if you want to know what mortgage you are eligible for specifically, then please fill out an enquiry form and an adviser will be in touch.
| 0-12 months | 1-2 years | 2-3 years | 3-4 years | 4+ years | |
| Late payments | Yes (If under 4 late) | Yes (If under 4 late) | Yes (Any number) | Yes (Any number) | Yes (Any number) |
| CCJs | Yes (If under £1000) | Yes (If under £2500) | Yes (Any value) | Yes (Any value) | Yes (Any value) |
| Defaults | Yes (If under £1500) | Yes (Any value) | Yes (Any value) | Yes (Any value) | Yes (Any value) |
| Debt MGMT | Yes (see note*) | Yes (see note*) | Yes (see note*) | Yes (see note*) | Yes (see note*) |
| IVA | Unlikely | Possible with 25% deposit | Possible with 20% deposit | Possible with 20% deposit | Possible with 20% deposit |
| Bankruptcy | Possible with 25% deposit | Possible with 25% deposit | Possible with 20% deposit | Yes with 10-15% deposit | Yes with 10% deposit |
*For debt MGMT: Debt management plans sometimes dont effect your credit file, in these instances some lenders are happy to consider an application. Often though, the establishemnts you owe money to will slap a default on your file the month after the agreement has been reached something debt scheme companies dont always share with you! So, if you are in debt management plan and looking for a mortgage, get a copy of your credit file here and send it over to us, a good broker can let you know, based on this, the likelihood of you obtaining finance.
| 0-12 months | 1-2 years | 2-3 years | 3-4 years | 4+ years | |
| Late payments | 1 (if only issue) | 1/2 (if only issue) | Yes (Any number) | Yes (Any number) | Yes (Any number) |
| CCJs | Unlikely | Maybe (If good LTV) | Maybe (If good LTV) | Yes (Any value) | Yes (Any value) |
| Defaults | Unlikely | Maybe (If good LTV) | Maybe (If good LTV) | Yes (Any value) | Yes (Any value) |
| Reposessions | Unlikely | Unlikely | Maybe (If good LTV) | Yes | Yes |
Bad credit home loans:
Sometimes, there just isnt a mortgage lender that will do what you need. When you are looking to borrow more money, to consolidate debts or raise capital and this happens, dont give up hope. Second charge, Bad credit mortgage loans might be the answer.
Other than mortgages for bad credit history, it may be possible and more appropriate to apply for a secured loan with bad credit. Secured loans are currently not regulated by the FCA in the same way and are slightly more flexible in certain situations, therefore there are some lenders willing to lend on a secured loan basis when a mortgage isnt possible. For more info on when a secured loan may be more appropriate than a remortgage, see our article here.
Best bad credit rating mortgages:
Use our online mortgage system to find the best mortgages for bad credit from the whole market. Please note, the results of this system do not take into account credit scoring or other criteria as described above and does in no way indicate you are eligible. Please enquire to find out which are the best mortgages available specifically to you by leaving your details at the bottom of this page.
How to improve your credit for a mortgage
1) Check your credit reports all of them.
In order to establish if a lender would consider your application, youll need to know what they are looking at. Every lender is different in who they use to reference an application some use Call credit, some Experian, some Equifax. As the agencies dont always share their info they are often different, and it can be that you are declined because of something on a report you dont know about. Sign up for your free trials here
>>>Signed up before? If so you may not qualify for the free trial. Try CheckMyFiles one off search here as this is likely to provide the most comprehensive overview.2) Be an active borrower
If you dont have a credit card, get one and spend then clear your balance every month. You should avoid paying any interest doing so within the 30 days period, and it really helps prove you can borrow and repay. If you have struggled to obtain a credit card, try the Luma card by Capital One here
TOP TIP: One of the best things you can do to increase your credit score is to obtain an adverse specific credit card, and spend and repay in full on a monthly basis this helps to prove you can borrow and live within your means at the same time, and youll notice your score improve over the coming weeks and months. There are 2 options here, the first is a standard credit card specifically for those with bad credit, the second is for those who are declined for standard cards and need a guaranteed-acceptance card (usually if you have had more severe and more recent adverse credit). Wed recommend trying for the Vanquis card first, then go for the Mastercard if declined.
3) Make an enquiry with us
If youve made an offer on a property and been declined, visit our fast mortgages page.
To ask an expert a question about bad credit history mortgages, fill out the quick enquiry form below
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