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  • Poor Credit
  • CCJ
  • Missed Payments
  • Default
  • DMP
  • IVA
  • Bankruptcy

It is always difficult to know whether or not you can get a mortgage with bad credit.

However, there is actually no such thing as a bad credit mortgage. It is just another mortgage. What you may not know though, is that there are lots of lenders that are not on the high street or well-known banks, that have a much more flexible approach to those that are seen to have bad credit. You can still qualify for a standard mortgage, however, it is just a little more complicated and important to have the right mortgage broker to find the right mortgage rate for you.

We have mortgage advisers that can search the market for you, without impacting your credit score and help you find the best mortgage possible.

What is Bad Credit and how do I know if I have it?

Bad Credit is defined in many different ways. Mainstream lenders can define Bad Credit as a missed payment, but there are other lenders out there where a missed payment doesn’t really have an adverse effect on their lending.

If you don’t repay a debt for potentially up to six months, the creditor will put you on a default which affects your credit score. CCJs (Court County Judgments) are where you are taken to court over a default or disagreement with a creditor. Bankruptcies and repossessions of properties are also considered to be Bad Credit circumstances, as well as IVAs, which means that you go into an agreement with the creditors to repay debt.

Can I get a mortgage with Bad Credit?

We have lots of clients come to us who have maybe been rejected by their own bank. This could be just for one missed payment in the last twenty-four months. Other lenders, however, wouldn’t see that as Bad Credit. There are definitely lenders who would lend, where mainstream lenders wouldn’t.

Whether or not you can achieve a mortgage with Bad Credit Mortgage Lenders depends on the severity of the credit issue and how long ago it happened. Most lenders are happy with issues that happened outside of three years ago, especially if defaults are satisfied. There are different criteria with each lender, and we can access all different types of lenders.

In some circumstances it might help to pay off debts that occurred in the last twenty-four months, especially if it’s a low amount, but the majority of lenders would take a default or CCJ if it’s satisfied and over thirty six months ago. It really depends on individual circumstances. You might need to put down a larger deposit for some lenders; it just really depends on their criteria.

Can you get a mortgage with a 500 credit score?

There are lenders that will offer a low Loan to Value loan if you still meet their internal credit score. Other lenders don’t actually look at the credit score, they will go on the registration date of the default, the CCJ or IVA, for example, and also how many you’ve got cumulatively outstanding.

Can I get a mortgage with a CCJ?

A CCJ is more severe than a default and some lenders will consider this if it’s over fifty-six months ago. It just depends on the date that it’s registered on your credit profile. Lenders will see how much is outstanding and if you’ve paid that up to date, they may look at how the rest of your credit file compares.

What about a Default?

It’s more to do with the size and when it occurred. If it’s a default for under a hundred pounds they might discard it because they know that some creditor tools can be quite quick to put a default on your account. If you’ve not paid debts for six months in a row and the creditor has put a default on your credit file, it’s more to do with how much is outstanding, the time it was registered and how many there are.

Some lenders have a maximum number of acceptable defaults of four inside of thirty six months, if they’re under a thousand pound combined. Some lenders might have a tighter criteria where they only accept one or two, but you can get a mortgage with a Default on your credit file.

A lot of people move house and maybe forget to phone British Gas or Scottish Power or to tell them you’ve moved address, which can result in a Default. They are quite hard to remove from your credit file. Mobile phone bills outstanding also seem to be a big reason for defaults, as there are unknown interest charges that add up on a small missed payment.

Can I get a mortgage with an IVA?

An IVA (Individual Voluntary Arrangement) is probably one of the hardest to overcome in the current market, and is more to do with the registration date. Even specialist lenders will need you to be either out of it for two years, or fully paid up for two years and maybe registration was six years ago or more. IVAs are up there with Bankruptcy and Repossession as quite severe credit issues, because you have entered an agreement with a creditor to pay it back.

How can I improve my credit score?

If clients don’t have any credit, registering yourself on the voters roll can help with your credit profile because it links you to an address. Having a credit card and paying it back each month can also help. We often advise younger First Time Buyers to take out credit cards and maybe put petrol on the credit card and pay it off every month to boost the creditworthiness. If you do this over a space of maybe six to twelve months, it does slowly start to bring the score up for you.

Is the process any different for First Time Buyers or if you were to Remortgage?

It doesn’t change too much from a First Time Buyer, to a Home Mover but a Remortgage is different because you’ve already got the property and you’re then looking to either Remortgage to a different lender, potentially before you go onto the variable rate.

With a Remortgage the majority of lenders will allow you to do a Product Transfer, which means that you just stay with the same lender, if you’ve got a default on a credit card or unsecured loan, as you have paid your mortgage on time. If you were looking to Remortgage with a new lender, however, you would still come under the same criteria as a First Time Buyer in terms of Bad Credit.

How can a Mortgage Broker help if you have Bad Credit?

A Mortgage Broker can help in quite a lot of cases. We have access to those lenders whose criteria are less strict than your own bank, for example. At The Mortgage Broker Scotland we have access to niche markets and different products, even some clients might not have heard of. We could therefore potentially place a lender with those clients, as they will have access to a broader spectrum of what’s available.

Your property may be repossessed if you do not keep up with your mortgage repayments. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 2%, but a typical fee of £495 is payable on offer.