Bad Credit Mortgages
Taking out a mortgage can be difficult for people who have poor credit history. If you’re dealing with credit issues or haven’t yet built a strong credit profile, you might face hurdles in obtaining a mortgage, particularly with high-street lenders. At UK Property Finance we have a panel of lenders who specialise in providing mortgages for those struggling to get a mortgage on the high street.
Credit issues considered:
- CCJs
- Defaults
- Mortgage arrears
- Missed/late payments
- Debt management plans
- DRO, IVA and bankruptcies
Other benefits of using UKPF:
- Access to lenders who accept 1 year of accounts for newly self-employed
- We can help first time buyers and first-time landlords
- FCA regulated
- Lenders available for properties in England, Scotland, Wales and Northern Ireland
- High loan to value options available
Purchasing a Property with Poor Credit
It is generally assumed that if your credit score is not perfect, getting a mortgage is out of the question. In reality, this is not necessarily the case.
Irrespective of how damaged (or underdeveloped) your credit record may be, there are options to explore beyond conventional High Street mortgages, such as Halifax and the many others. The key to success lies in targeting the right lenders with your applications, with the help of an experienced broker.
Bad Credit Mortgage Options
These days it is possible to secure a subprime mortgage, aka a ‘bad credit mortgage’. These specialist type mortgages enable borrowers with a bad credit history to access the loans they need to purchase homes. When a person has a bad credit history they are considered a ‘higher-risk’ applicant in the eyes of lenders resulting in stricter terms and higher interest rates.
Subprime Mortgages
Traditionally, bad credit mortgages have always attached higher rates of interest and elevated overall borrowing costs. This is to offset the assumed ‘higher risk’ of lending to a poor-credit applicant.
This does not necessarily mean that accessing an extremely competitive and affordable mortgage deal with poor credit is impossible. Working with a specialist ‘subprime’ mortgage provider, your requirements and overall financial position will be taken into account – not just your credit history.
If it is clear you can easily meet your long-term repayment obligations, you may qualify for a deal as competitive as any traditional High Street mortgage.
There may be higher fees payable to get the deal up and running in the first instance due to the way the lender will seek to mitigate any potential risk due to the imperfect track record. All of which may sound negative but nonetheless adds up to an open and accessible option for poor credit applicants in need of a mortgage.
When dealing with bad credit mortgage providers it is still important to ensure you get the best deal. An interest only mortgage can be a good option for poor-credit applicants who may be unable to qualify for other types of mortgages.
Is it true that after 6 years your credit is clear?
Usually after the 6th year your credit file may not show the adverse credit. However, this does not mean it is ignored by lenders. For example, if you have had a bankruptcy, even if it was over 6 years ago this will need to be disclosed as the lenders will do a check and it will show anyone that has previously had one. There are lenders who will not accept anyone who has previously had a bankruptcy. If the adverse credit was a default or CCJ which was never satisfied it could stay on your credit file. Missed payments are typically accepted if they were over 6 years ago and this will normally come off your credit file.
Ready to get started?
If you’re thinking about a mortgage but worried about a poor credit history, book a call with one of our advisors and organise a online appointment and we will be happy to help or check our contact page to see if we are open now to talk to you.
With so many options to explore it’s important to seek the advice of an independent mortgage broker. Bad credit mortgage lenders typically operate away from the UK High street which can make it difficult to track down a good deal without expert support. Discuss your requirements and your credit history with an experienced broker such as UK Property Finance who can use a bad credit mortgage calculator to work out the costs for you.