Getting a Mortgage with bad credit

Important to know

A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

It can be difficult and very complicated if you are looking to get a Mortgage with poor credit. You may want to buy your first home or remortgage to switch to a better deal. You may also want to borrow more money when your Mortgage is up for renewal to pay for some home improvements or debt consolidation by taking some equity out of your property.

People with impaired credit worry if they will be accepted for a Mortgage and the fees they may have to pay. People assume that they will have to be put on a higher interest rate. Lenders check your credit report to see how you have managed your finances and any short term borrowing you may have taken out to understand your capability for long term borrowing.

Below are a few points to help you understand how you can get a Mortgage or Remortgage with bad credit.

Can I get a mortgage with bad credit?

You can get a Mortgage even with impaired credit. There are many specialist lenders who are willing to lend. You will need the support of a specialist Mortgage Broker who can look at your credit report, understand your situation and take your case forward to the specialist lenders. Not many people are aware of these specialist lenders because they may not be high street banks that will look at your credit score and judge you based on the credit score and decide that they are not willing to lend to you and take a risk.

We at Your Mortgage Experts work with specialist lenders to help our clients fulfil their dreams of owning their home. Please contact us to help you get a Mortgage approved.

The things to be aware of, which will impact your credit score are:

  • Missed or late payments
  • Paying less than the minimum payment amount requested
  • Only paying the minimum amounts for long term
  • Having no credit at all- No form of short-term borrowing
  • Getting a CCJ (County court judgement) for not paying someone you owe
  • Being bankrupt
  • Getting an IVA (Informal voluntary arrangement)
  • Getting a DMO (Debt management order)
  • Becoming a victim of fraudsters

A CJJ, IVA or Bankruptcy will last on your credit file for 6 years.

What are the credit score bands, with different credit referencing agencies?

Understanding Poor Credit report score bands with different credit referencing agencies is important, as it may determine the ability to apply to certain lenders and the product interest rates they may charge you.

Equifax-under 379 is a poor score.

Equifax- under 279 is a very poor score.

TransUnion- between 551-565 is a poor score

TransUnion- between 0-550 is a very poor score.

Experian- between 561-720 is a poor score

Experian- between 0-560 is a very poor score

Can I remortgage with my existing mortgage lender if I have bad credit?

When you are remortgaging and if you stay with your current lender they may not do any further credit checks or credit assessments. However, if you wish to make any changes such as borrowing more, amending the term or the type of repayment method you have, they may want to reassess your credit.

Does it matter when I have received a CCJ and how big can the CCJ be?

If you have a CCJ registered the older the CCJ was registered the better. Usually, specialist lenders do prefer that it has been registered over 12 months ago. The amount is also a key factor. Usually if the CCj was registered more than 2 years ago they will allow anything up to £2.5k, whereas if it was registered in the last 12 months they would like the amount to be under £1k. Lenders will assess how many CCJs you have registered as a risk factor associated with lending to you. Lenders also prefer the CCJ being settled as it makes you more reliable and less risky and it will also fall off your credit report in 6 years.  Check out here further tips on how to get a mortgage with a CCJ.

 

Can I get a mortgage if I was declared bankrupt or if I have an IVA?

If you have an IVA registered best to have proof of payments up to the last 24 months.

Bankruptcy means starting your credit file all over again. You will need to wait 1 year after you have been discharged to start rebuilding your credit file.

Hot tips to improve your credit score:

  • Overpay into your Mortgage up to 10% each year if you can
  • Only use 25% or less of any credit available to you
  • Check that you are on the electoral register
  • Monitor your credit file
  • Make consistent repayments into any short-term borrowing- e.g. credit card, personal loans, car finance and payment plans.

 

What can I do if my credit report shows incorrect information?

If you see any defaults on your credit file, you can ask the credit referencing agency to remove it, if you do not agree with it. Monitoring your credit file at all times helps maintain a healthy credit score.

Please contact us at Your Mortgage Experts on 020 815 411 11for more expert advice on getting a Mortgage with poor credit, or drop us a line hello@yourmortgageexperts.co.uk

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Shapla

Mortgage Expert

Shapla is a Mortgage and Protection Specialist with years of experience helping people with their mortgage and protection needs. Your Mortgage Experts is led by Luca Bertolino with 20 years experience in financial services and in the property market. Through our advisors' wealth of knowledge and expertise, Your Mortgage Experts have become a trusted adviser that people have come to rely upon for all their mortgage and protection needs.

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