What is a bad credit mortgage?

Money problems can affect anyone; especially today with the country in a cost-of-living crisis. ‘Bad’ or ‘Adverse’ credit mortgages are available to borrowers with negative payment information on their credit records that stem from previous debts. Even though not all lenders are willing to provide bad credit mortgages in the UK, and the deals are unlikely to match standard mortgages, with the correct broker and advice a desirable mortgage deal is available for those with less than perfect credit history.


Applying for a mortgage

When you apply for a mortgage with a bank, building society, or lender, credit checks are conducted to determine your eligibility and risk level. Black marks on your credit history vary in how they will be perceived in your application depending on the amount of money involved, how much time has passed, and how likely it is to reoccur. If you have bad credit history some high street banks may refuse to give you a mortgage outright. Building societies can be slightly more flexible however many people choose to go with specialist bad credit mortgage lenders who are far more flexible when assessing your application and are far more likely to get accepted by the lender.


Your credit issues

Expert brokers are extremely helpful when applying for a bad credit mortgage as the types of issues considered by lenders vary greatly. A UK bad credit specialist will have huge amounts of in-depth knowledge and experience working with bad credit loans and therefore can give the best personalized advice for your application. It's often a misconception that you won't be approved for a mortgage with any adverse credit issues, however as you can see below it's more than possible to secure a mortgage you are happy with despite bad credit in the UK.

We have listed some of the most common bad credit issues a specialist can you help with:

No credit history
Known as having a ‘thin’ credit file, this applies to those who have little or no credit record. While this is not inherently a bad thing, it does make it difficult for lenders to predict how likely you are to pay your bills on time. This issue often applies to younger, first-time buyers, and can be a challenge to get a reasonable mortgage without specialist advice.

Low credit score 
Your credit score reflects how lenders see you; for example, if you have late payments on your credit report this would make the lender think you won't pay them on time, lowering your score. This is most commonly affected by late payments of loans or credit cards however could occur for a host of other reasons. It's important to remember different lenders have different criteria, so just because one application was refused outright doesn’t mean it will not be considered by a different lender. A specialist adverse credit broker makes this far simpler with knowledge of different lenders' criteria.
Missed mortgage payments or defaults – Your credit score can be negatively affected by any late payments after your agreed grace period of 7 years. Mortgage defaults carry a more serious weight and can jeopardize future mortgage applications. A specialist adverse debt mortgage broker can help you navigate your available options and find a desirable mortgage for bad credit in the UK.

County Court Judgements
It's possible to find a lender that will offer mortgages, even with an unsatisfied CCJ on record but a greater number will be approved from those which have been fully satisfied.

IVAs and Mortgages with a debt management plan
Even though you won't be able to get a mortgage when you’re still repaying an IVA, you may be able to whilst replaying a debt management plan however it will be very difficult to secure a desirable deal. After repayment, it's completely possible to secure an adverse credit mortgage at a reasonable rate with a good broker.

It's completely possible to secure a new mortgage after the previous repossession. Providing you have demonstrated good credit conduct since the repossession a specialist broker will help you by knowing which lender you should apply to and what criteria you match.

The majority of mortgage lenders in the UK will consider an application following previous bankruptcy providing it has been discharged for more than 3 years. Although it may be difficult to find the best deal, a specialist broker will be able to find the best-suited lender for your situation.


Can I afford a broker?

Another common misconception is that specialist brokers are unaffordable. The reality is that despite the extra percentage fee on top of the borrowed amount, a bad credit mortgage broker will be able to secure savings that cover the fee and potentially even more, which you wouldn't necessarily achieve without them. Brokers not only boost your chances of success with a mortgage with bad credit, but their existing relationships with lenders and specialist knowledge of the industry secure you a better deal. The fee can fluctuate depending on the circumstances of the adverse credit, however, it may not be possible to secure a mortgage without the help of a specialist bad credit mortgage broker depending on your situation.
Why not enquire today with Leeds Money for a no-obligation free call back to see how we can help you secure your dream mortgage, despite the bad credit?


Remortgaging with bad credit

It’s very common for our credit history to change throughout our lifetime, it's also possible that the mortgage deal you first secured is not the best one for you now. Reviewing your mortgage can save you thousands of pounds; however, you may find it difficult or even impossible to remortgage with bad credit, meaning you are missing out on the best deal for you.

Even if you can remortgage with bad credit, it's worth trying to improve your credit score if you have time. Making your monthly mortgage repayments on time will help build a stronger credit history, and if your credit rating increases enough you may be eligible to secure a better rate. Your rate will depend on your credit score, income, current property value and your equity. Potential lenders will also run checks to ensure you will be able to afford the payments at the new rate going forward. An expert broker will be able to assist you to remortgage and ensure you get the most competitive remortgage rates possible for your situation.


Leeds Money is your reliable mortgage broker

Leeds Money is a leading mortgage broker and is on hand to answer any questions you have regarding mortgages for bad credit. Getting a remortgage or mortgage with adverse credit can seem impossible, however with an expert broker you too can get a great deal despite your credit situation. Speak to one of our advisors today for a free no obligation assessment and discover the mortgage deals you can secure with a specialist bad credit mortgage broker.

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