Category: Bad Credit

Of course, everyone wants to make sure that they are getting the best available interest rate when they take out a mortgage.

However, if you have bad credit you will most likely find that you are not eligible for the most competitive rates on the market.

Interest rates offered to bad credit customers are usually considerably higher than those provided to customers with an unblemished credit history.

This is merely down to the risk factor you pose to the lender.

All is not lost though as there are more lenders out there who can still get you a good deal on mortgages with bad credit.

Our aim is to help you understand how your credit history can affect how your mortgage is affected in terms of eligibility and rates depending on your current circumstances.

Hopefully, you will find the answers to any questions you may have below.

How do lenders treat applications from bad credit customers?

Over the last few years, there has been an increase in the number of lenders entering the mortgage market with a lot more willing to take a more flexible approach to applications from those with bad credit.

More providers now than ever are approving mortgages for customers with a less than perfect credit history.

Obviously, those with minor credit flaws will be more likely to qualify for the better interest rates whereas those with more severe credit issues will face rates at the higher end of the scale.

The market sector has changed insignificantly in the last 10 years and has now become more competitive for bad credit customers.

You must ensure that you are using a specialist advisor in order to get the best deal. Contact one of our expert advisors who are on hand to help you today.

Do lenders have different criteria?

Most lenders don’t make their criteria public knowledge, so it often feels like stepping into the unknown when applying for a mortgage when there are so many providers in the mortgage market.

Still, there is a wide range of professional and specialist brokers available to help.

It is our job to make the process as simple as possible by pairing you with a specialist lender who will make you the best offer based on your circumstances.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

How different credit issues impact the rates you may be offered

Whilst some credit issues weigh heavier on your credit report than others, it is worth mentioning here that the type of credit issue you have experienced may determine the interest rates that are available to you, if your application is even successful that is.

Bankruptcy, for example, has a bigger impact than say a missed or late payment but all these things are carefully considered by the lender when reviewing your mortgage application.

Credit issues can vary from arrears to CCJs and right up to the more serious factors such as bankruptcy and repossession.

Although you may still be able to get a mortgage with a CCJ or default.

Don’t be put off if you have one or more of these marks on your credit file as there are specialist providers out there that may still offer you a favourable rate.

Obviously, the more adverse issues that appear on your credit file, the less chance you have of securing a lower rate on your mortgage. Some lenders may look less favourably on your application if you have multiple adverse issues on file.

How does the upturn in the market affect bad credit mortgage rates?

If you look at the current mortgage rates online, it is clear to see that business is booming and lenders are feeling more confident.

This has had an influence on the bad credit mortgage sector but in a positive way.  If you look at the rates from 10 years ago on a bad credit mortgage, you will see that the market now is much more competitive.

This enables borrowers with a less than perfect credit history to still apply for and obtain a mortgage, whilst not paying unreasonably high rates.

If your credit issues were minor, then you may even be in a position to obtain a mortgage using similar providers and having access to similar mortgage products than those with a clean slate.

Does the LTV (loan to value) have an impact on mortgage rates if I have bad credit?

Loan to value ratio is basically the size of your mortgage balanced against the value of the property you want to purchase.

This term is often explained as a percentage. For example: If your mortgage was £100,00 against a £125,000 house or property then the LTV ratio is 80%. The remaining £25,000 is made up by the deposit.

Depending on your circumstances, the LTV is changeable. In order to offset some of the risk bad credit customers pose to the lender, they may ask for a larger deposit.

If your credit history has minor issues recorded then you may find that you won’t need a larger deposit whereas if your credit history shows more severe issues such as CCJs and Bankruptcy then the lender may require you to stump up a higher deposit.

A more favourable view is taken to those customers who save a higher deposit, and this is quite simply down to the fact that you pose less of a risk to the lender.

Essentially, the more deposit you have, the better your position in the mortgage market and you should find that you will likely have more favourable mortgage rates available to you as a bad credit customer.

Make an enquiry with one of our specialist advisors today to discuss the options available to you.

Speak to one of our mortgage experts about bad credit mortgages

Can I get a cheap mortgage with a poor credit history?

No two lenders are the same and each one has different criteria which must be met before they will consider or accept your mortgage application when you have a poor credit history.

If the lender deems that you have scored well on your affordability check then chances are you may be eligible for better rates.

Does the date the adverse credit was recorded affect the rates that are available to me?

Quite often, the mortgage rates available to you are calculated based on how long your credit issues were recorded.

It is important to note that you can obtain good rates on your mortgage if the credit issue no longer appears on your credit report (older than 6 years).

High street lenders may be quick to turn down your application from the outset if you have a poor credit history of a more serious nature e.g. Bankruptcy.

However, some will make exceptions depending on the length of time the adverse issue has been on your report.

It is difficult to determine at which point in your credit journey that you will qualify for the best interest rates.

Our specialist advisors are on hand to work with you and connect you to the best mortgage providers on the market, with your circumstance in mind.

My credit issues are still outstanding. Does this matter?

Yes. Most lenders only consider lower mortgage rates for borrowers whose adverse credit appears as settled on their credit file.

Some lenders may expect you to wait until your credit issues have been resolved before you can proceed with your mortgage application if you want to be considered for lower rates.

As well as impacting the rates available to you, unsettled credit issues can also affect the amount you can borrow for a mortgage.

Lenders will carry out affordability tests to ensure that you can afford the repayments on any mortgage that you are considered for.

The outcome of these measures will determine how much you can apply for.

In summary, the following will likely be considered when your mortgage rates are being decided upon:

• Interest Rates available.
• Amount of credit issues you have recorded on your file.
• How long ago the credit issues were recorded.
• If the credit issues have been settled.
• The types of credit issues that were recorded on your file e.g. Bankruptcy, CCJ, defaults.
• The number of lenders available based on your current circumstances.

The key to finding the best rates available to you based on your circumstances is talking to a specialist advisor.

If you have a bad credit history, you are best speaking to an advisor whose speciality is bad credit mortgages.

Many high street lenders will turn bad credit customers away from the onset or even offer them ridiculously high mortgage rates to offset the risk they pose to the lender.

Our advisors will not turn you away. Our aim is to connect you with the best mortgage providers in the market whilst getting you the best deal available.

We will work with you to ensure that your circumstances and specific needs are catered for in the application process.

We can also help advise you on buy to let mortgages if you have poor credit.

Contact us to begin your mortgage application

Whilst the thought of having a bad credit mortgage can be unnerving for many, it is important to consider the amount of deposit you will need before you apply, otherwise, your mortgage application may be declined.

If you have adverse credit, then be prepared to put down a more substantial deposit in order to secure your mortgage.

The positive factor to take away from this is that the more money you have to put down as a deposit, the better access you will have to things like mortgage rates.

Luckily, there are plenty of specialist lenders in the mortgage market that will lend to customers with a less than perfect credit history.

Can I get a bad credit mortgage with no deposit?

Obtaining a mortgage without a deposit can prove quite difficult in normal circumstances.

In recent years, mortgage lenders have revised their lending criteria by way of protecting themselves from high-risk borrowing.

Nowadays, lenders look at many factors when considering the amount of deposit, you will need to put down.

These factors include:

• How long ago the debt was accrued.
• How much debt was accumulated?
• Whether the debt has been satisfied or settled?
• Your current income/expenditure.

If you don’t have a deposit and have bad credit, then you will find very difficult to obtain a mortgage.

How will my credit score affect the amount of deposit I will need?

The first thing lenders usually look at in any mortgage application is the prospective borrowers credit history.

This is used to determine your ability to make your monthly repayments on time and in full.  Quite often, people with bad credit are considered a risk to lenders.

However, there are providers in the market who specialise in mortgages with bad credit.

It is worth noting that if you are rejected for a mortgage, this may have a detrimental affect on your credit score, so it is recommended that you get the best advice before you apply.

Speak to one of our mortgage experts about bad credit mortgages

What types of bad credit are considered when applying for a mortgage?

Lenders will look at your credit file and consider the following as bad credit:

• History of late payments on previous or current debt.
• Missed payments on secured credit (mortgages).
• Defaulted payments.
• IVA’s (can you get a mortgage with an IVA?)
• CCJ’s (can you get a mortgage with a CCJ?)
• Bankruptcy (can you get a mortgage with bankruptcy?)
• Repossession (can you get a mortgage after a repossession?)
• Debt Management Schemes.

Realistically, lenders aim to offset the risk to themselves when considering applicants for a bad credit mortgage.

A large deposit is seen as a positive in the application process and may open more options to you than if you had a low or zero deposit.

Start your mortgage application today

There are lenders in the market however that do specialise in bad credit mortgages with lower deposits, but you can expect to pay much higher interest rates for that type of mortgage.

I have a substantial deposit already. Can I still get a mortgage with bad credit?

Put quite simply, the more deposit you have, the less mortgage you will need.

Prospective customers who approach the lender with a large deposit to put down on a bad credit mortgage are seen as less risk.

This is due to the fact that you will require a smaller mortgage.

Good news for the borrower is that if you pay a larger deposit, then you will have a higher equity in your property and your mortgage will likely be more affordable.

If you have a large deposit and bad credit, make an enquiry to one of our expert advisors who can help you locate a specialist lender.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

My partner has bad credit but mine is good. Does this affect the application?

Whether you apply for a mortgage as an individual or as part of a couple, the lender will look at the credit history/scores of all persons named on the mortgage application.

On one hand the benefits of two applicants is that two incomes will be considered, meaning that you may be eligible for a bigger mortgage but in contrast one applicants bad credit score can have a negative impact and lower the chances of your application being successful.

If your partner has bad credit you may opt to apply solely in your name if the lender allows.

That way your partner and their financial records will not be taken into consideration during the application process.

If you are applying solely it is worth noting that depending on your income, you may not be eligible for a mortgage on your own.

Start your mortgage application today

How can I save for a deposit for a bad credit mortgage?

First things first, it is never too early to start saving for your deposit. In fact, the sooner the better.

We have compiled a list of helpful tips that can increase your chances of obtaining a bad credit mortgage by saving for a deposit.

1. Get an idea of the amount of deposit you will need. This will give you the goal to work towards first and foremost.

2. Organise your finances. A great starting point when trying to save some money is taking a look at your overall current financial position in the form of a personal budget. Make note of all your monthly outgoings and set that against your income. From here you can see where you need to make cutbacks, whether it be from unnecessary spending or just simply switching utility providers to make an extra saving. You will quickly learn just how much you can afford to save towards your deposit each month.

3. Be realistic. Make sure that you allow enough money to cover the basic cost of living e.g. food, water, heating etc before you start to make cutbacks. The length of time it takes you to save will be dependent on how much you can afford to set aside. Be realistic about this figure and don’t be tempted to cut corners on the basics.

4. Open a savings account. Once you start saving money, you will need somewhere to store it safely. A savings account is the best option. Money can easily be transferred between current accounts and savings accounts in the form of standing orders. Depending on the type of savings account you go for, you can gain interest on the money deposited into your account. Shop around for the best interest deal so you can capitalise on your savings. There are many saving accounts available on the market, but you want to ensure you get the most out of your money so shop around using price comparison sites before settling on one.

5. Consider a help to buy ISA. The UK government will help you by topping up your savings to put towards a deposit on a house. It can certainly give you a push up the ladder, but you need to be absolutely clear on the terms and conditions of the account before you apply.

Our experts are on hand to help you with any questions you might have surrounding deposits and bad credit mortgages. Contact one of our expert advisors today to learn more.

Start your mortgage application today

Even if your property has been repossessed, you can still get a poor credit mortgage.

It’s all down to knowing where to look and making sure you meet the conditions.

People often make the mistake of thinking that obtaining a mortgage after repossession is impossible.

Whilst it is true that some high street lenders will frequently decline mortgage applications that show evidence of adverse credit, it is important to note that not all lenders are the same.

The key is knowing which lenders to apply to, meet those lender’s criteria, and maintain good credit conduct after the repossession.

In short, if you have had a home repossessed in the past that doesn’t mean you cannot obtain a mortgage in the future.

You simply need to look at speciality lenders based on your circumstances and show that you can meet the criteria in terms of deposit and affordability – that’s what our expert mortgage advisors are for.

Can I get a mortgage after a repossession?

Most lenders consider the following when reviewing your mortgage application:

Date of Repossession

Probably the first and most important factor that lenders consider before your application is the date of your repossession.

The more time that has passed since your repossession, the more likely lenders are to consider offering you a mortgage. I

f your property has been repossessed within the last 3 years for example, then you will find it very difficult to get a mortgage without making a substantial deposit.

If the repossession was over 3 years ago, you may be able to apply for a mortgage up to 85%  loan-to-value (LTV) whereas if your repossession was over 6 years ago, you may be able to apply for a mortgage up to 95% LTV.

It’s pretty simple: the more recent the repossession, the more deposit you will need.

What interest rates will I be eligible for after a repossession?

The time elapsed since the repossession also has a significant impact on the rate at which you can acquire a mortgage.

If the repossession occurred in the last 3 years, the rate will be higher.

There is more chance of being offered a competitive rate if the repossession occurred over 3 years ago.

However, for repossessions that occurred over 4 years ago, better rates may be available offered.

These rates will often be comparable to those of the market leaders.

It is worth noting that the amount of deposit you have available will impact rates, as will other credit behaviours.

Repossessing mortgage lender

 It is quite common for your mortgage application to be affected by the lender who repossessed the property.

If your property was repossessed by a lender belonging to a financial group or institution, then it is more likely that your mortgage will be rejected if you apply to one of the companies within that financial group.

It is important that you do your homework before seeking out a lender. It is vital that you choose a lender that is most appropriate for your mortgage needs.

For example, if you have a poor credit profile, then it may be best to seek out a lender that specialises in obtaining mortgages for those with an unbalanced credit history.

Our expert mortgage advisors are on hand to do the hard work for you and find you the best deal available on the market.

 Reason for Repossession

The reason for repossession ranks high on the checklist of many lenders as they will take into consideration the reason for your repossession. This is all part of the application process.

If you have a genuine reason for repossession, i.e. if you were the victim of fraudulent activity or other factors beyond your control, then many lenders will relinquish these factors in order to offer you the best deal available.

It is important to investigate this before applying and attempt to gain some understanding of which lenders operate this policy.

Size and Cost of Repossession

Lenders will explore the amount of capital involved in the repossession. If this figure is high, then it can have an adverse impact on your mortgage application.

For example, if the repossession runs into the millions, or if the repossession was taken against multiple mortgages, it could be harder and more costly for you to obtain a mortgage.

In a nutshell, the lower the amount of money involved in the repossession, the more likely lenders are to readily accept your application and offer you a more competitive rate.

Please note that this is based solely on our vast experience working with all types of lenders and that every application is different. The success of your application coupled with the mortgage rates offered will highly depend on the quality of your application.

Want a mortgage for a rental property? They work slightly differently to regular residential mortgages, learn all about them in our buy to let mortgages with bad credit.

So, in summary, lenders will usually assess your eligibility for a mortgage after repossession based on:

• Your current financial position.
• The time elapsed since the repossession.
• Your credit profile since the repossession.

Speak to one of our mortgage experts

What if I have a poor credit history?

Don’t be put off applying for a mortgage if you have a less than colourful credit history. There are plenty of lenders out there who can help.

We specialise in poor credit applications but please be aware that if you’ve had past or present blemishes on your credit file after your repossession, then you may find it difficult to secure a good rate.

The more cracks you have on your credit file, the higher rates you’ll be offered.

If there are other credit issues on your credit file such as arrears, defaults, late payments, bankruptcy or CCJ it can often make a lender question your creditworthiness, especially if these have occurred since the repossession.

This quite often indicates that you have not fully recovered financially from the repossession and can have a detrimental impact on the number of lenders likely accept your application.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

Credit behaviour since the repossession

Lenders want to lend their money to customers who have proved that they can recover from an unstable financial past and has repaired their bad credit.

Those who can show that they are less likely to default on another mortgage are more attractive to lenders.

Make sure you keep up to date with payments for unsecured debts (such as credit cards, loans etc.) so that lenders can see that you’re able to keep up with credit commitments.

 Affordability assessment

In order to obtain another mortgage after repossession, you will be subject to the same eligibility criteria as any other mortgage application.

You will need to supply significant evidence of affordability to the lender. As a customer with a past repossession, you are more likely to be under heavier scrutiny though.

The key is to provide enough evidence to prove to the lender that you are low risk of defaulting on future mortgage payments or running into similar trouble as in the past.

Looking for a commercial mortgage with bad credit? You may be interested in the possibility of shared ownership.

 Legacy Payments

 In cases where the money is still owed to a lender after a repossession, you will often find that the list of lenders available to you will be significantly lower than if you had no outstanding financial obligations to the previous lender.

This can also have an adverse effect on the amount of money you will need for a deposit. In brief, the more money owed after repossession will have a greater impact on the success of your application

Key points to remember:

• Not all lenders are the same.
• The date of your repossession will determine the interest rates available to you and impact the amount of deposit you will need to secure a mortgage.
• The more evidence you can supply to prove your affordability and credit stability, the more chance you have of obtaining a better deal.
• Contact us today to speak to our mortgage experts.

Contact us today

Contrary to belief, it is possible to get a mortgage even if you have been declared bankrupt and had your house repossessed in the past.

Although many mortgage lenders will decline applications from bankruptcy clients, there are lenders in the market that are more understanding and will happily consider you for a mortgage.

However, do expect to front a larger deposit to qualify. Lenders will look at your personal circumstances including your credit history when making their assessment.

A record of bankruptcy shows that you present a higher risk to the lender and as a result, some may decline the application at this point.

You can also expect to be offered mortgage deals with higher interest rates.

How long after bankruptcy can I get a mortgage?

During a period of bankruptcy, it isn’t unusual to have restrictions imposed on your borrowing.

Bankruptcy terms dictate that you cannot apply for a mortgage until you have been officially discharged. This usually takes up to 12 months depending on the court’s decision.

The more time that has elapsed, the more chance you have of a lender approving you for a mortgage.

Post-bankruptcy, the point at which you will become eligible to apply for a mortgage differs lender to lender.

If you apply for a mortgage immediately after the point of discharge then you will need to meet very strict criteria, have a substantial deposit, and find yourself subject to higher fees and rates.

As more time passes, the bankruptcy becomes less relevant from the perspective of a lender.

After 4 or 5 years, a lender will most likely see you in the same light as everyone else but more so if your credit history has been clear of any issues since discharge.

You will also find that more lenders in the market will consider an application at higher loan to value rates, the longer you have been discharged.

For example, if you have been discharged over 4-5 years and have kept a good credit record, you may be able to borrow up to as much as 90-95% LTV. If eligible, these lenders may be able to offer you more competitive rates too.

If you have been recently discharged, then you will find it significantly harder but can still obtain a mortgage though at least 25% deposit will be required in a lot of cases.

If you’re unsure about your eligibility, please get in contact with one of our specialist advisors to discuss your situation.

Contact our mortgage experts

Tips for applying for a mortgage after bankruptcies

If you are in a position whereby you want to apply for a mortgage post-bankruptcy, then there are a few things you can do to help get approved:

1. Check your Credit Reports

First and foremost, we recommend checking your credit score. It is important to regularly check your credit file.

This is where all your financial irregularities are recorded, and it will give you an overall picture of your financial profile as seen by lenders.

Some credit files contain discrepancies which can be detrimental to your mortgage application.

It is important to check that dates etc are accurate on your credit file, especially where bankruptcy is listed.

Irregularities like this can be a result of basic admin error but could make your mortgage approval very difficult.

Fundamentally, it can be the difference in being accepted or declined for a mortgage after bankruptcy. 

2. Check your Eligibility

Once you have checked and corrected any discrepancies on your credit file, it’s time to check if you are eligible to apply for a mortgage.

Some lenders can decline applications even after they have passed a credit check, based on the bankruptcy.

This is where specialist lenders come into the equation. Contact us to speak to an expert bankruptcy mortgage adviser today.

3. Rebuild your Credit Profile

One of our financial advisors can guide you to take the steps you need to repair your credit file, as offer you advice on mortgages with bad credit.

National Hunters Report

If 6 years have passed since your discharge, then relatively speaking there should be no trace of bad credit on your file.

Most assume that it is therefore easy to apply to any lender and get accepted for a mortgage, but this is not the case. This due to the National Hunters Report.

The National Hunters Report is a register that contains the names of anyone ever made bankrupt in the UK, even if you were discharged over 6 years ago.

So, although you may get through a bank credit check at the initial application stage, you can be declined at a later stage when the Hunters Report brings your bankruptcy to light so ensure that you declare this.

Although this can be very disappointing and frustrating for many applicants, fear not, there are still several lenders that may consider your application at this point.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

Credit behaviour since the bankruptcy

If there are other credit issues on your credit file before the bankruptcy such as arrears, defaults, late payments, CCJs or a debt management plan, then the bankruptcy itself should effectively wipe them off and they should appear on your credit report as settled.

The credit file is reset and after a year passes, discharged customers can attempt to rebuild their credit profile from scratch.

However, if you have experienced credit issues after the bankruptcy, lenders will consider you a high risk.

Lenders will want to see that you have successfully learned to manage your finances in a responsible manner since the bankruptcy.

It is important that your bankruptcy default is marked up to date on your credit file before making your application.

Which lender can I apply to with bankruptcy on my file?

There are a few discharged bankrupt mortgage lenders in the market.

Whilst some are mainstream lenders offering high rates and overlooking discharged bankruptcies of over 4 years, there are other specialist lenders who can take on applications for bankruptcies discharged less than 3 years ago but these do tend to have higher rates and fees attached to them.

Get in touch with one of our experts and we will help establish the best lender for you.

Can I get a buy to let mortgage after bankruptcy?

Depending on your circumstances, it may be possible for you to obtain a buy to let mortgage if you have been declared bankrupt in the past.

However, you will often need to meet the criteria outlined below:

• have saved a deposit of over 15% (amount varies).
• have a personal income.
• have been discharged from bankruptcy for at least 3 years.
• have a clean credit file since bankruptcy.
• own at least one other property.

Even if you don’t meet the criteria above, we may still be able to help.

A mortgage after bankruptcy requires specialist knowledge.

Remember, you can contact our expert advisors for advice.

I had an IVA. Can I still apply for a mortgage?

Just like bankruptcy debt, IVAs can come as a deterrent to many lenders but there are specialist providers who focus on applications containing credit issues.

These providers tend to take a more formative view of your mortgage application.

Just like other issues, IVAs stay on your credit file for 6 years, however, if the debt has been listed as settled for more than 3 years, there are a small number of lenders who will accept an application from someone with a current IVA.

Start your mortgage application

Contrary to belief, it is possible to get a mortgage even if you have been declared bankrupt and had your house repossessed in the past.

Although many mortgage lenders will decline applications from bankruptcy clients, there are lenders in the market that are more understanding and will happily consider you for a mortgage.

However, do expect to front a larger deposit to qualify. Lenders will look at your personal circumstances including your credit history when making their assessment.

A record of bankruptcy shows that you present a higher risk to the lender and as a result, some may decline the application at this point.

You can also expect to be offered mortgage deals with higher interest rates.

How long after bankruptcy can I get a mortgage?

During a period of bankruptcy, it isn’t unusual to have restrictions imposed on your borrowing.

Bankruptcy terms dictate that you cannot apply for a mortgage until you have been officially discharged. This usually takes up to 12 months depending on the court’s decision.

The more time that has elapsed, the more chance you have of a lender approving you for a mortgage.

Post-bankruptcy, the point at which you will become eligible to apply for a mortgage differs lender to lender.

If you apply for a mortgage immediately after the point of discharge then you will need to meet very strict criteria, have a substantial deposit, and find yourself subject to higher fees and rates.

As more time passes, the bankruptcy becomes less relevant from the perspective of a lender.

After 4 or 5 years, a lender will most likely see you in the same light as everyone else but more so if your credit history has been clear of any issues since discharge.

You will also find that more lenders in the market will consider an application at higher loan to value rates, the longer you have been discharged.

For example, if you have been discharged over 4-5 years and have kept a good credit record, you may be able to borrow up to as much as 90-95% LTV. If eligible, these lenders may be able to offer you more competitive rates too.

If you have been recently discharged, then you will find it significantly harder but can still obtain a mortgage though at least 25% deposit will be required in a lot of cases.

If you’re unsure about your eligibility, please get in contact with one of our specialist advisors to discuss your situation.

Contact our mortgage experts

Tips for applying for a mortgage after bankruptcies

If you are in a position whereby you want to apply for a mortgage post-bankruptcy, then there are a few things you can do to help get approved:

1. Check your Credit Reports

First and foremost, we recommend checking your credit score. It is important to regularly check your credit file.

This is where all your financial irregularities are recorded, and it will give you an overall picture of your financial profile as seen by lenders.

Some credit files contain discrepancies which can be detrimental to your mortgage application.

It is important to check that dates etc are accurate on your credit file, especially where bankruptcy is listed.

Irregularities like this can be a result of basic admin error but could make your mortgage approval very difficult.

Fundamentally, it can be the difference in being accepted or declined for a mortgage after bankruptcy.

2. Check your Eligibility

Once you have checked and corrected any discrepancies on your credit file, it’s time to check if you are eligible to apply for a mortgage.

Some lenders can decline applications even after they have passed a credit check, based on the bankruptcy.

This is where specialist lenders come into the equation. Contact us to speak to an expert bankruptcy mortgage adviser today.

3. Rebuild your Credit Profile

One of our financial advisors can guide you to take the steps you need to repair your credit file, as offer you advice on mortgages with bad credit.

National Hunters Report

If 6 years have passed since your discharge, then relatively speaking there should be no trace of bad credit on your file.

Most assume that it is therefore easy to apply to any lender and get accepted for a mortgage, but this is not the case. This due to the National Hunters Report.

The National Hunters Report is a register that contains the names of anyone ever made bankrupt in the UK, even if you were discharged over 6 years ago.

So, although you may get through a bank credit check at the initial application stage, you can be declined at a later stage when the Hunters Report brings your bankruptcy to light so ensure that you declare this.

Although this can be very disappointing and frustrating for many applicants, fear not, there are still several lenders that may consider your application at this point.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

Credit behaviour since the bankruptcy

If there are other credit issues on your credit file before the bankruptcy such as arrears, defaults, late payments, CCJs or a debt management plan, then the bankruptcy itself should effectively wipe them off and they should appear on your credit report as settled.

The credit file is reset and after a year passes, discharged customers can attempt to rebuild their credit profile from scratch.

However, if you have experienced credit issues after the bankruptcy, lenders will consider you a high risk.

Lenders will want to see that you have successfully learned to manage your finances in a responsible manner since the bankruptcy.

It is important that your bankruptcy default is marked up to date on your credit file before making your application.

Which lender can I apply to with bankruptcy on my file?

There are a few discharged bankrupt mortgage lenders in the market.

Whilst some are mainstream lenders offering high rates and overlooking discharged bankruptcies of over 4 years, there are other specialist lenders who can take on applications for bankruptcies discharged less than 3 years ago but these do tend to have higher rates and fees attached to them.

Get in touch with one of our experts and we will help establish the best lender for you.

Can I get a buy to let mortgage after bankruptcy?

Depending on your circumstances, it may be possible for you to obtain a buy to let mortgage if you have been declared bankrupt in the past.

However, you will often need to meet the criteria outlined below:

• have saved a deposit of over 15% (amount varies).
• have a personal income.
• have been discharged from bankruptcy for at least 3 years.
• have a clean credit file since bankruptcy.
• own at least one other property.

Even if you don’t meet the criteria above, we may still be able to help.

A mortgage after bankruptcy requires specialist knowledge.

Remember, you can contact our expert advisors for advice.

I had an IVA. Can I still apply for a mortgage?

Just like bankruptcy debt, IVAs can come as a deterrent to many lenders but there are specialist providers who focus on applications containing credit issues.

These providers tend to take a more formative view of your mortgage application.

Just like other issues, IVAs stay on your credit file for 6 years, however, if the debt has been listed as settled for more than 3 years, there are a small number of lenders who will accept an application from someone with a current IVA.

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There are many different types of loan out there, which may be useful in a variety of different circumstances.

However, arguably the most controversial type of loan is the payday loan.

This is intended to be a short term loan for those in incredibly difficult financial situations.

Their intention is simply to give you enough to get by until payday comes about. However, they can have insanely high-interest rates of higher than 1000%.

Here at Mortgageable, we’ve looked at the challenges that payday loans present when you’re applying for a mortgage, and how, if it’s possible to overcome them, to secure a bad credit mortgage.

What is a payday loan?

Payday loans is often a method of short-term borrowing for those looking for fast finance.

As a result, lenders that offer payday loans often charge interest rates that are incredibly high.

The loan is then repaid within a month, typically on ‘payday’, which is why they are referred to a ‘payday loans’.

Payday loans have a reputation for offering extreme interest rates, yet when people desperately need finance, they can be helpful.

Typically, payday loans are used in an emergency, i.e. when something happens out of the blue and the finances aren’t available until payday.

The interest rates on payday loans can exceed 1000%. It wouldn’t be financially wise to use them often, yet reported figures indicate that individuals tend that take out payday loans often do it multiple times.

So how do payday loans impact your ability to get a mortgage?

Can I get a mortgage if I’ve had payday loans in the past?

Whilst it’s impossible to argue that having one in your history is not going to be a good thing, it may be still possible to get a mortgage despite having a history of payday loans.

Make no mistake, it will make things harder for you as you won’t have as many options in terms of the type of mortgage you can go for, and you will probably have to go for a specialist lender instead of a high street one, who is likely to reject your mortgage application.

The best thing you can do is speak to a mortgage advisor who specialises in helping those in your situation.

At Mortgageable, we can look at your particular record and situation and give you the best advice for where to go for a mortgage and the steps you need to take to improve your credit report in order to increase your chances of being accepted for a mortgage.

We can also make you aware of the extra barriers that you will have to overcome.

You will almost certainly have to put down a higher deposit and if you have bad credit, you can expect to pay a higher interest rate on your mortgage.

It’s also unlikely that you will be given 100% of the money that you need for the house, instead, it can vary from 75% to 95% depending on the lender and the rest of your credit report.

Also, you may have less choice in terms of the lenders you will be able to pick from, and the type of mortgage plan you will be eligible to select.

How Long do Payday Loans Stay on your credit report?

Any type of late or defaulted loan payment will remain on your credit file for 6 years and that includes Payday loans.

Just like any type of borrowing the credit reference agencies treat them equally.

For a mortgage application, this may make it more difficult to be approved by a lender, but there may still be options available.

There will likely be less choice, but it all depends on your particular circumstances.

Why don’t lenders like payday loans?

The main reason why most mortgage lenders don’t like payday loans is that generally, they suggest that you’re irresponsible with your money, and you’re unable to live within your means, and manage your budget efficiently.

Many people who take out payday loans do so simply because they can’t wait to save up for something frivolous that they wish to have.

Of course, this isn’t always the case as you might have been put into that situation because you have fallen ill, or a horrible accident has happened in your home.

Unfortunately, a lot of lenders may not take this into account and just look at the fact you’ve taken out a payday loan.

Historically, some sites have stated that payday loans can actually be good for a mortgage application, claiming that if you can be shown to take out a payday loan and pay it back on time, it will show the lender that you’re good at managing your debt.

However, this information is false and can lead to your mortgage application being instantly rejected.

Even if you manage to pay it back on time, with as little interest as possible, any payday loan will have an effect on your mortgage application.

Mortgage lenders want to know that the mortgage will be repaid, and unfortunately, if you have a history of payday loans, you will be seen as a bigger risk.

This is because it will be assumed that you’re bad at managing your money, and therefore will be less likely to be able to pay them the amount that you have agreed.

For this reason, most high street lenders will just turn you away straight away if you have payday loans on your credit report.

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What will be taken into consideration with my application?

Credit repayment history

Like any type of credit, taking out a payday loan will leave a mark on your credit report, where lenders will be able to see that you’ve had payday loans in the past.

Someone who once took out a payday loan will face much fewer obstacles than someone who has taken out several payday loans, been late on most of the payments, gone into default, declared bankruptcy, and gone onto a debt management plan.

You need to do what you can to ensure that the rest of your credit report is looking good, that way, it will be easier for lenders to overlook the fact it has payday loan on it.

But, it is important to remember that a payday loan will stay on your credit report for six years.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

LTV

The LTV on the mortgage application is also considered – LTV refers to how your required loan is compared to how much deposit you have put down.

For example, if you have paid a 5% deposit, you will need a 95% LTV. For those with a good credit report, this is usually fairly straightforward to get.

However, for those who have taken out a payday loan, the LTVs available will be much lower, meaning you may have to get a bigger deposit. This will likely be something which you will need to discuss with your mortgage advisor.

How do I find out what previous loans I have had? 

If you are unsure whether you have had a Payday loan in the past, or in fact any other type of loan, you can find out by checking your credit report.

The report will detail all of the data help about your history stored by the Call Credit reference agency.

Your report will a history of your borrowing in the last six years, including any Payday loans.

What if I’ve been declined for a mortgage already?

If you’ve already been declined for a mortgage, get in touch with us today.

We may be able to explain to you why it was that you were denied a mortgage the first time around, and what the best option will be for next time.

Perhaps the issue was with the particular lender that you went to, and you would have better luck if you had gone to another lender instead.

Or perhaps you need to work on improving the rest of your credit report in order to minimise the impact that a payday loan is going to have on it.

Another option would be to wait at least 12 months, as some lenders want to see at least 12 months without a payday loan being taken out before they’ll consider an application.

A sensible aim to have is to improve the rest of your credit score. This can be done in a variety of ways:

• Avoid any more credit applications – especially any more payday loans.
• Ensure you’re on the electoral roll at gov.uk
• Make sure all bills are paid on time – this shows lenders that you can be trusted to manage your finances. One late payment may not have a huge impact on your credit report, but several missed payments may rule you out from certain lenders.
• Check your credit report for any errors or inaccuracies
• Check if you’re financially connected to an ex-partner or housemate
• Don’t apply for several credit products in a short space of time – this can come in the form of phone contracts, utility bills and credit cards. If all done in a short space of time, it could suggest to a mortgage lender that you’re struggling with your finances.

Contact us today to see if you can get a mortgage with a history of payday loans

Sometimes, if you’ve taken out a payday loan, you might feel that getting a mortgage is out of reach.

We’ve arranged mortgages for customers with a history of payday loans, so give us a call on 03330 90 60 30 contact us today to discuss your circumstances and start your new mortgage application.

Can you get a mortgage with a CCJ? If you have blemishes on your credit record, you may be worried that you are ineligible for a mortgage.

You may be reluctant to approach lenders or apply for mortgages in case you are refused and your credit rating is further affected.

The truth is, that ‘black marks’ on your credit history do not automatically rule you out of getting a mortgage.

There are a number of niche lenders that specialise in providing mortgages to those with defaults or CCJs.

These lenders will consider the severity, the duration, and how historical the credit issues are, then determine how closely you meet their other eligibility requirements.

In this article, we will explain the best way to secure a mortgage if you have CCJs or defaults on your credit file.

Getting a Mortgage with CCJs

As a result of having bad credit, many people are refused a mortgage.

However, a mortgage broker can help you find lenders who are more likely than traditional lenders to accept your application.

It will take time to assess your particular circumstances and lenders may have additional criteria, in this guide, we will cover some of the major points to help you understand how it is still quite possible to secure a mortgage with a CCJ.

What is a CCJ?

A CCJ, otherwise known as a County Court Judgement, is issued if you fail to pay a debt that you owe.

Having one of more CCJs on your credit file may affect your mortgage choices, but it certainly doesn’t rule out lending altogether -you may need to look for a bad credit mortgage lender.

Whilst, many mainstream lenders will refuse to offer a mortgage to those with an open CCJ or ones that have been issued in the past 3 years, there are lenders that will take them into consideration.

Although it may be more difficult and more complicated than securing a mainstream mortgage, it is possible to secure a mortgage with CCJs through a speciality lender.

In these cases, your mortgage application is likely to be declined by many lenders, but it is still possible to secure a mortgage with a poor credit rating.

Can I get a mortgage with CCJs?

There a number of factors regarding your CCJ(s) that mortgage lenders will take into account, including:

• The Date of the CCJ – The most important factor is when the CCJ was registered. The longer the date that the CCJ was issued, the better the chances of securing a mortgage. The date the CCJ has been resolved is also important, with many lenders requiring CCJs to be settled for 12 months or more before agreeing to a mortgage. However, there may be a few lenders that don’t require CCJs to be resolved at all.

• Number of CCJs – A specialist bad credit mortgage lender will typically limit the number of CCJs registered in the last two years to 2, with minimal restrictions for those registered longer than 24 months ago. The larger the deposit you have, the more CCJs your lender is likely to accept, as long as they were issued over 12 months ago.

• Amount of CCJ – The amount of the CCJ is important as it often determines the amount of deposit you will need to put down. If your CCJ was issued over 2 or 3 years ago, the amount of the CCJ will have little effect on your mortgage, however, if it is less than 2 years old, size does matter. For example, a CCJ over 12 months old that is £2,500, would probably require a 15% deposit. If the CCJ is less than 12 months old, it is limited to £1,000. Generally speaking, the larger the deposit you have, the larger the amount of CCJ your lender will accept. For a large CCJ, expect to require a deposit of between 25 and 35%.

• Satisfied or Unsatisfied CCJ – Speciality lenders will vary on whether they accept lenders with unsatisfied or satisfied CCJs, but you will have access to a larger choice of lenders if your CCJ is resolved. If your CCJ is unsatisfied, some lenders may require you to pay it off before applying for a mortgage, while others will allow you to apply as long as the CCJ is over 2 years old. Lenders that accept satisfied CCJs may require it to be paid off for over 12 months before accepting your application.

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Getting a Mortgage with a CCJ is not the only thing your lender will consider.

They will also have eligibility requirements that you will need to meet to improve your chances of successfully applying for a mortgage.

They are:

• Deposit – The bigger the deposit you have, the better. If you only have 5% to put down, then your CCJs will need to be older than 3 years at least. If you have a 25% or more as a deposit, then you could still be eligible for a mortgage with CCJ issued in the last 12 months. In fact, most lenders will require a large deposit for bad credit mortgages.

• Mortgage Type – Standard mortgages (fixed rate, variable, tracker, etc.) and remortgages will have the most flexible eligibility criteria when it comes to CCJs. Things may get a little more complicated for first-time buyers, with some providers only accepting lenders with CCJs under £1,000. Buy to Let mortgages may be a little more difficult, often having further restrictions put in place. You may be required to put up a larger deposit or meet a minimum age requirement.

• Affordability – More recent CCJs may restrict your lending. Your employment may also be a factor. For example, lenders may impose further restrictions if are self-employed with less than two years of accounts.
• Additional Credit Issues – Other credit problems on your file may also affect your likelihood of being accepted for a mortgage. Issues such as late payments are considered less serious and tend to be acceptable in the previous 2 years, as long as they don’t stretch to more than 3 months late. More severe credit problems, such as bankruptcy, repossessions, IVA, or being in a debt management plan, along with CCJs, may make is much more difficult to find a willing mortgage provider. Missed mortgage payments are more serious.

Read our full guide on applying for a mortgage after an IVA.

Can I get a mortgage with a satisfied CCJ?

Fortunately getting a mortgage with a CCJ or defaults is possible and your options will be more abundant if you have a satisfied CCJ.

If you have an unsatisfied CCJ, many lenders require you to pay it off before applying for a new mortgage, yet there are still lenders available who do offer mortgages to those with unsatisfied CCJs and defaults.

When do CCJs Expire?

County Court Judgments (CCJs) stay on the Register of Judgements, Orders and Fines for 6 years in total. They also stay for the same amount of time on your credit report/file.

Thankfully, a CCJ will not stay on your file permanently and will be removed at the end of the 6 year period.

Even better, you do not need to wait to apply for a remortgage and you may have the opportunity to secure one, even with a CCJ against you.

And remember, if you pay your debt off in full within one month of the judgement being issue you won’t have the CCJ recorded.

In these cases, you will be recorded as “satisfied” in the register, allowing potential lenders to see you cleared your debts.

Looking for a commercial mortgage with bad credit? You may be interested in the possibility of shared ownership.

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How Do I Know if I have a CCJ?

Have you ever been refused a loan or credit in the past?

There are many potential reasons for this, one of them being if you have had a CCJ placed against your name.

You can check if you have A CCJ by accessing the Register of Judgements, Orders and Fines.

There is a small fee to do this, so the alternative and often free method is to ask the credit reference agency.

Often people ask the question “how do I know if I have a CCJ?” and this can be a result of various different reasons.

For example, a debt that you felt wasn’t communicated effectively to you or maybe even misplaced paperwork, that means you were not aware.

It’s common for the courts to mail you the details of a CCJ against you, but if you are still unsure, you can always access the Register of Judgements, Orders and Fines to find out and put your mind at rest.

Can I Get a Mortgage with a CCJ?

Regardless of your credit score and whether it has a CCJ recorded, getting a mortgage with a CJJ is just like any other applicants and an affordability assessment will be completed on you.

This is to determine the mortgage rate amount and the interest rate you will be offered.

If you have a CCJ on your credit report, this might result in you being assessed in a different way.

Typically, those with a CCJ will not be able to borrow as much as those with a clean credit file and the associated costs will be higher e.g. interest and admin fees. This is even more applicable to those with unpaid or recent CCJs.

It is not all bad news though. You could still get a great mortgage deal with or without a CCJ. Mortgageable can help find you and compare mortgages for CCJs and defaults with our network of lenders.

Thankfully, there are still mortgage lenders that accept CCJs.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

Getting a Mortgage with Defaults

You can still get a mortgage with defaults on your credit file.

A specialist lender may be able to find you a deal that fits your circumstances, as long as you match their criteria in other areas, such as income, affordability, and other credit issues.

Types of Mortgage Defaults on Credit File

Late Payments, Missed Payments, and Defaults

A late payment is when a bill is paid after the due date; a missed payment is when the bill is not paid; a default is marked on your credit file when there have been several missed payments.

You are usually issued with written notice of default and given a deadline to respond.

The creditor can then close your account and request payment in full, with the default staying on your credit file for six years.

You should be aware that late payments will also appear on your credit history for up to 6 years, but are marked differently (with a number next to it representing how many months late it is), and are often ignored by lenders if they occurred more than 2 years ago.

Missed payments also appear on your credit history, and along with defaults, they are considered the more serious credit issues.

Lenders will consider how long it took to repay the debt or how much is owed.

The more historical the missed or default payments, the better your chances of getting a mortgage with a history of defaults.

Want a mortgage for a rental property? They work slightly differently to regular residential mortgages, learn all about them in our buy to let mortgages with bad credit.

Secured Loans and Unsecured Loans

In the world of defaults, there are two types of loan: secured loans and unsecured loans.

A secured loan is one that is linked to an asset, such as a house i.e. mortgage payments.

An unsecured loan includes the likes of utility and phone bills, and credit card payments, car loans not linked to an asset.

Missed payments and defaults to unsecured loans are considered to be much less serious than those on secured loans.

A few missed payments on unsecured loans over the last 6 years is unlikely to affect a mortgage application.

If you have more missed payments than that, you may be expected to put down a larger deposit or be offered a deal with a higher interest rate.

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Defaults on Mortgage Payments

The most severe kind of missed payment in the eyes of lenders is a missed mortgage payment.

A single late payment made over 2 years ago may be acceptable to some lenders, but to secure a new mortgage, you really need to be up to date in your current one.

Even specialist poor credit lenders will find it difficult to lend to those in mortgage arrears.

Recent Missed Payments

The more recent the missed payment the worse it looks to lenders.

Defaults in the last 12 months will seriously affect your chances of getting a mortgage, particularly if you have a small deposit.

To increase your chances of securing a mortgage with a good rate, raise as much of a deposit as possible.

CCJ Mortage Options

If you are still unsure about your options or have a question we haven’t managed to answer in this guide, feel free to contact us today for a free, no-obligation discussion.

Call us today on 01925 906210 or email us. One of our advisors can talk through all of your options with you.

Having a poor credit rating doesn’t mean you can’t get a mortgage and you’ll never own property. You may even be afraid to approach lenders for a mortgage in case you get turned down and your credit rating taking another potential hit.

Furthermore, it can be difficult to know if your credit rating is bad, as different banks and lenders will have varied opinions on credit based on your history.

If you’re wondering how to get a mortgage with a bad credit rating, read on to find out everything you need to know about bad credit mortgages.

Is It Possible to Get a Mortgage with a Bad Credit History?

The short answer is yes. If your credit does fall into this ‘bad’ estimation, that doesn’t mean that you can’t get a mortgage.

It may be more difficult than if your credit was better, but there are specialist lenders out there that offer bad credit mortgages, giving you a chance to get on the property ladder.

Rather than look at the blemishes on your credit history, these lenders will look at the duration and severity of the issues, as well as how close you are to meet their eligibility requirements.

Specialist bad credit mortgage lenders are more flexible with their lending, compared to their mainstream counterparts.

With specialist lenders, your bad credit history or poor credit score may not necessarily stand in your way of getting a mortgage, providing mortgages to those with:

• Missed mortgage payments or other late payments.
• A poor credit score or no credit history.
• Defaults in payments.
• Bankruptcy or repossessions.
• CCJs and IVAs.
• Debt management schemes or payday loans.
• Multiple credit issues.

In terms of severity, bankruptcy and repossession are considered the most serious, whilst the likes of missed mobile phone payments are on the other end of the scale.

Are you wondering “Why your mortgage application was declined?“, read on to find out how you may be able to avoid that in the future.

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What Issues are Taken into Consideration for a Bad Credit Mortgage?

When you have poor credit or no credit history, other factors will be taken into consideration to determine whether you can actually afford a mortgage and the monthly repayments.

Firstly, your employment status and income will need to be disclosed to your lender.

The lump sum you have available for a deposit is also of great interest to a specialist bad credit mortgage agency.

For a conventional mortgage on a residential property, the usual sum required for a deposit is at least 5% of the property’s value, but it may be more depending on circumstances.

For a buy to let home the deposit can be as high as 25%.

If you have bad credit, the ability to put down a larger deposit than the traditional mortgage lenders expect may lower your perceived risk of not being able to pay off the loan.

Regular outgoings will be also taken into account – such as dependent children, other loans, credit cards etc. – and the proportion of your income they take up.

This will help to determine how much money you will be able to borrow based on the monthly payments you can comfortably make.

Also, the type of property is of interest, particularly those with specialist features and non-standard construction.

If the home you’re interested in has the likes of a timber frame, thatched or grass roof, etc. you may need to go through a specialist lender.

How do I Get a Bad Credit Mortgage?

It is important to note that specialist lenders will put conditions in place that are different from mainstream lenders.

You are likely to need a larger deposit than those required for a conventional mortgage, with specialist lenders having stringent caps on the amount of money they are willing to lend those with bad credit.

The majority of bad credit mortgage lenders may loan 60% of the property’s value, however, a few may be willing to lend as much as 90%.

Additionally, you can expect a poor credit mortgage to have interest rates that are significantly higher than those from high street banks.

However, there will also be potential marked effects on your credit rating if you keep up with the payments.

Over time your credit rating may improve, which could give you the option to remortgage with better interest rates in the future.

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Preparing for your Bad Credit Mortgage Application

It is important to know what your actual credit rating is before applying for a mortgage so contact one of the main credit rating agencies Experian or Equifax for an accurate credit report.

It is imperative that the information supplied is current and correct, so double-check everything before submitting.

There are several online services that will provide you with a credit report for free online, or there are paid online subscription services so you can monitor your credit rating.

Additional documentation that you will require for your mortgage application includes the likes of:

• A current driving license or passport to verify your identity.
• Bank statements for your current account dating back between 3 to 6 months.
• Payslips from the last 3 to 6 months or if you are self-employed, your accounts and tax return forms (SA302) for the previous 3 years.
• Utility bills.
• Council Tax bill.
• Insurance policies.
• Proof of any benefits you receive.
• Your general living cost, such as travel expenses, childcare, regular outgoings etc.
• Details of the property you wish to purchase, the estate agent you are buying through, and your solicitor.

Each specialist lender may have different criteria when it comes to what information you require and your income and outgoings.

So, before applying, get in touch with our expert team here at Mortgageable to see if there’s anything else needed for your application.

Be sure not to make multiple online or mainstream bank applications as rejections can negatively affect your credit rating further.

Having several ‘hard’ searches on your credit file can adversely affect your chances of getting a mortgage when you find the right lender.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

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What About My Income?

Your income will usually determine the cap on the amount you are eligible to borrow.

Most mortgage providers will allow borrowing up to four times your annual salary, although some may offer up to 5 or 6 times your salary if the circumstances are right.

Affordability is key and lenders us affordability calculators to assess lending levels.

If your credit is bad, but you are a high earner you will still be considered a high risk for a mortgage that is a high multiple of your wage.

It may be possible through an expert mortgage broker, who can find you a flexible lender that specialises in bad credit mortgages to high earners.

Start your search for a mortgage by getting some advice from a whole-of-market mortgage broker and determine what your best options are depending on your income and how much you would like to borrow.

If you have a bad credit rating and a low income it may be a little harder to secure a mortgage as they are definitely not common, falling into the niche category of lenders.

Still, this doesn’t mean you won’t be able to get a mortgage – there may be a lender out there that specialises in lending to those with poor credit and a low income.

There are other options available if you fall into both categories, such as supplementing your low income with benefits, Shared Ownership schemes, and guarantor mortgages.

Get in touch with us today to talk through your options with you and advise you on the best route to go down.

Bad Credit Mortgage Lenders Main Takeaways

• Yes, those with a poor credit history can still get a mortgage.
• Raise as large as a deposit as you can as this will improve your chances of getting a mortgage.
• Check your credit reports and improve your credit rating as much as possible before applying.
• Find a lender that specialises in bad credit mortgages – that’s where Mortgageable come in!
• Speak to our export mortgage advisors today to discuss through your options.

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You’ll usually pay higher interest rates on unsecured borrowing than secured borrowing.

So if you’re stuck paying high levels of interest on your debts, it could be worth looking into a debt consolidation mortgage. 

What is a debt consolidation mortgage?

Are you struggling to make ends meet each month?

If your debt just doesn’t seem to be decreasing, it’s probably because the payments you’re making are just covering your interest payments, and not the debt itself.

In some cases, it can take years to pay off a credit card if you’re only able to make the minimum monthly repayments.

A remortgage for debt consolidation allows you to take out a mortgage large enough to pay off an existing mortgage, while also covering all of your existing debts.

How does it work? 

In order to qualify for a re-mortgage, the lender will take into account the following:

• Your credit report and any current debts you hold.
• The value of your property.
• How much of the property you own.
• The amount you want to borrow vs your income.

Typically, lenders will also request you to agree and sign an undertaking drawn up by a solicitor before approving the remortgage.

An undertaking is an agreement that you will repay the debts in full upon the release of the funds, however, if your income is sufficient to make the repayments itself, then this won’t usually be necessary.

Note: If your current mortgage interest rate is highly competitive and you do not want to lose it, then a remortgage may not be the best option for you and you may also want to consider a second charge loan.

Why would you consolidate your debts into a mortgage? 

By consolidating your unsecured debt next time you remortgage, you can quickly reduce your monthly outgoings and comfortably pay back what you owe in a realistic time frame.

The main benefit of a debt consolidation mortgage is a dramatic decrease in interest rates.

The other benefit is streamlining your payments into one monthly instalment, so there’s no need to worry about numerous payments over the course of the month. 

And there’s no need to worry about receiving a CCJ or IVA in the future. 

With a debt consolidation mortgage, you could pay off the following types of unsecured debts:

• Credit cards.
• Personal loans.
• Payday loans.
• Overdrafts.

Remortgage your debt here

Is a debt consolidation mortgage a good idea?

For many individuals, a debt consolidation mortgage can certainly be a good idea, but it should be something that is considered with care.

Even though consolidating multiple debts is attractive as it can convert your debts into a single instalment and reduce your rate of interest, there are some key things to be aware of and so you should always seek professional advice first:

• There may be cheaper alternatives than a remortgage, such as balance transfer credit cards.
• Transferring unsecured debts into a secured debt against your home means that your property acts as collateral and so is at risk if you fail to keep up with repayments.
• Although the interest rates on a mortgage can be lower, they are usually much longer, so you may end up paying more. By adding other debts onto your mortgage, you may end up paying interest on them for a longer period of time.

How much can you borrow? 

The amount you can borrow will be dependent on the amount of equity in your home, current debts, credit history, as well as whether or not you meet the lenders affordability criteria.

Your debt-to-income ratio may also be taken into account, though each lender will allow you to borrow in line with the specified limits.

For example, some lenders may allow you to borrow as much as 90% of the loan-to-value (LTV) ratio for properties exceeding a valuation of £500,000 and over, while others may only allow you to borrow a specified amount e.g. £20,000.

Other lenders may be more focused on how your original debts were gathered in the past and base their decision on a case by case basis, rather than your debt-to-income ratio.

Remortgage your debt here

Debt consolidation vs. Second Mortgage 

The main distinction between a debt consolidation mortgage and second charge mortgage is that a second charge mortgage is essentially a secured loan, which uses your home as security.

A debt consolidation remortgage puts your mortgage on a new deal and releases equity to pay off the debts.

A second charge mortgage means you will have a first mortgage/first charge loan, as well as the second mortgage that can be used to pay down debts.

The main advantage of a second charge mortgage is that it allows you to keep your mortgage and the associated interest rate, so is ideal for those wanting to keep their current interest rates.

How can I consolidate debt as part of my mortgage?

There are two main ways to consolidate your debt with your mortgage.

1. Remortgage your entire debt over to a new mortgage lender. This method lets you arrange a new mortgage for the value of your current mortgage, added to the debt you have. For example, if you have a mortgage to the value of £150,000 and debts of £25,000, you would take out a new mortgage with a new lender for £175,000. If you own a property where you have a suitable amount of equity, this is a useful solution. By doing this, you can also release equity which will allow you to pay off some of the money you owe using a lump sum. At the moment, with some lenders, the maximum Loan to Value (LTV) ratio allowed to do this is 90%. This means that if you own a home worth £100,000, the maximum you could borrow (including your existing mortgage) would be £90,000. If you want to pay less and lower your monthly payments, this is a good option because the mortgage rate will usually be the best available to you at the time.
2. Take out a new loan secured on your current mortgage. With this method, you’ll essentially have two mortgages on your home. For example, you might decide to keep your current £150,000 mortgage and also take out a new secured loan for the value of your £25,000 debt. If you choose this option, it’s worth remembering that your monthly repayments probably won’t drop as considerably. This might also be a better solution for those with a poor credit rating, or those who want to retain their current mortgage deal.

Things to consider before consolidating your debt into your mortgage

There are several things to consider when looking at consolidating your debts into your mortgage, such as the following:

• The amount of equity in your home – some lenders may consider a 90% LTV remortgage, however in most cases, 85% is the maximum LTV for debt consolidation, so you need to ensure you have enough equity in your home currently to cover your debts. The lower your current LTV, the better as otherwise you may enter the next LTV band meaning a higher mortgage interest rate. Work out your current LTV, and what your LTV will be once you’ve added your debts to your mortgage, and if it is 85% or under then you may be able to get a debt consolidation remortgage with us.
• Check if your current deal allows additional borrowing on your mortgage – if you can get extra borrowing on your mortgage, find out if there are any fees and rates available.
• Check if you can remortgage now – if you’re in the middle of a fixed rate, you may have to wait until the end of that term before you can apply for additional borrowing to avoid paying early redemption charges; so be sure to check the terms and conditions of your current mortgage deal. If you’re at the end of a fixed-term mortgage (such as 2 or 5 years), you may be able to remortgage with another lender and not incur early repayment charges.
• You’ll be paying the debt over a longer-term – your monthly payments will be considerably lower, however as they’ve been added to your mortgage term, it’s likely you’ll be paying the debt over a longer period than the initial terms of your unsecured debts.

Remortgage your debt here

What type of debts can I consolidate with a remortgage?

Typically, most unsecured debts can be consolidated when you remortgage.

Examples include:

• Credit cards.
• Unsecured personal loans.
• Car finance.
• Hire purchase agreements.

Some lenders ask for proof that the debts have been paid as part of the conditions of the mortgage offer, so be sure to get confirmation that the debts have been paid in case you’re asked for proof in future.

Note: Bad credit commercial mortgages are also useful for those looking for commercial properties with a poor credit history.

Can I get a debt consolidation remortgage if I’ve got a bad credit history?

Depending on the severity of your credit history, you may be able to find a lender that suits your needs.

If you’ve had a few late credit card payments, in theory, you’ll have more disposable income every month and the debt is secured, so you’ll be deemed less of a risk compared to more unsecured borrowing.

Lenders will like to see a history of payments being kept up to date, so ensure that for at least 6 months before your application that all payments are made on time.

We’ll help you find the right mortgage deal as we have access to over 80 lenders, so get in touch today to begin your debt consolidation remortgage application.

Mortgage Rates for Debt Consolidation

If in a considerable amount of debt many people attempt to clear it using a loan or a credit card, but the issue is that these generally have high-interest rates, so are not the best option for an individual already indebted.

An alternative route is to opt for a remortgage or a secured loan instead.

Since these are secured against your home, the interest rate offers you will receive are typically lower, allowing you to reduce your monthly outgoings and manage your debts better.

By consolidating all of your debts into a single loan, you will most likely reduce the amount of interest you will pay.

This means your debt will likely be easier to manage and pay off, making it less of a weight on your shoulders.

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How do I know if a debt consolidation remortgage is the right choice for me?

If you’re struggling to keep track of your monthly payments, or you’re finding it difficult to make ends meet, a debt consolidation mortgage might make life easier.

Always think carefully before securing debts against your home, and bear in mind that in some cases, you might still end up paying more over a longer period of time.

Remortgage for debt consolidation Summary

We have access to more than 90 lenders, and we know a thing or two about debt consolidation mortgages.

If you’d like to talk to us about your circumstances, you can contact us on 01925 918960 or complete our quick Debt Consolidation Application Form and we’ll be in touch. 

One of our friendly advisors would be happy to help you.