Bad Credit Mortgages
Securing a mortgage can be challenging for individuals with a poor credit history. If you’re facing credit issues or haven’t established a solid credit profile, you may encounter obstacles when trying to secure a mortgage, especially with mainstream lenders. At UK Property Finance, we work with a network of lenders who specialize in offering mortgages to those who may have difficulty obtaining one through traditional high-street lenders.
Credit issues considered:
- CCJs
- Defaults
- Mortgage Arrears
- Missed/late payments
- Debt management plans
- DRO, IVA and bankruptcies
Benefits of using UKPF:
- Access to lenders who accept 1 years self employed accounts
- Lenders available in England, Scotland, Wales and Northern Ireland
- Can source mortgages for first time buyers and first time landlords
- High loan to value options available
- Whole of market broker
- FCA regulated
Bad credit mortgage options
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. The key to success lies in targeting the right lenders with your applications, with the help of an experienced broker.
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.
The cost of a mortgage increases depending on the level of adverse credit you have. There are different risk levels that lenders can accept, which is highly beneficial when your overall credit file is clean but you have had a couple of missed or late payments. The more adverse credit that is registered and the more recent these credit blips are, the more expensive the mortgage could be.
Is it true that after 6 years your credit is clear?
In the UK, it’s generally true that most negative information on your credit report, such as missed payments, defaults, and CCJs (County Court Judgments), will be removed after 6 years. This means that after 6 years, these entries no longer impact your credit score.
However, this doesn’t necessarily mean your credit is “clear” or that all issues are automatically resolved. The 6-year rule applies to certain types of negative information, but:
- Bankruptcies: Stay on your credit report for up to 6 years from the date of your bankruptcy order.
- Defaults: Typically stay for 6 years from the default date.
- CCJs: These can also stay for 6 years, but they might be removed earlier if you settle them.
Keep in mind, other factors like missed payments or high debt-to-income ratios may still impact your credit score even after 6 years. Additionally, some lenders might have different criteria, so it’s important to check your credit report regularly and work on improving your financial habits.
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.