Bad Credit Mortgages - help with poor credit history
Bad Credit Mortgages
Bad Credit Mortgages generally is a term used for clients with missed payments, a CCJ, IVA, Debt Management Plan or Bankruptcy.
Finding those lenders, however, and working out if they’re likely to approve your application can be complicated and confusing. Which is where The Mortgage Hut comes in. We know the market, including which lenders offer bad credit mortgages, and what it takes to get your application approved. It's important that a mortgage application is packaged in the correct way, with logic that a lender will accept and reasoning to explain the adverse credit. You only get one opportunity to make an application, so make sure you're dealing with a broker who know what they're doing.
Our specialist team assist thousands of clients every year, so you're in safe hands.
Credit Scores - How important are they and how does it work?
Lenders look at your credit score as well as your ability to make repayments before deciding whether to approve any credit application, including credit cards, loans and mortgages. Generally, they use reports from one of the two main credit reference agencies (Experian and Equifax) who calculate your credit score and produce a credit report based on:
- Your current level of debt and available credit; most lenders don’t want to see you using more than 50% of your available credit.
- Your repayment history across any credit agreements you hold, including whether you have made payments on time and if you have paid off at least the minimum amount required.
- Late payments will generally be seen as a negative and will reduce your credit score.
- If you have a bankruptcy, Individual Voluntary Arrangement (IVA), Debt Relief Order (DRO), or Debt Management Plan (DMP) on your credit record, how long it has been on there and whether it has been discharged.
- Whether you have any County Court Judgements (CCJs) against your name and how long ago these were issued.
- The number of credit applications you have made and over what time period.
Not having a credit history can have a negative impact on your credit score in just the same way as late payments. Young people, for example, or those who’ve recently moved to the UK may find they have no score simply because they haven’t had time to build up a good one. Lenders always want to be able to see someone payment history to understand and calculate risk.
Regardless as to the reasons, if you have a bad credit rating, your ability to get any type of credit will be limited and if you’re considering buying a new home, you’ll be best speaking to one of our specialists, who can help even if your bad credit is current.
What is a Good Credit Score?
- 420 out of 700 for Equifax
- 880 out of 999 for Experian
It's important to note, that some specialist lenders do not credit score, so if your score isn't great, it's not the end of the world. Our mortgage specialists are on hand to help!
You can check your credit score for free through any and all of the credit reference agencies, each of which have online portals that make it a quick and easy process. It is worth registering with all three because they have such different ways of assessing your credit history. Sign up for monthly updates on your score too, if these are available, so you are made aware of any changes, good or bad, in good time.
What are Bad Credit Mortgages?
How to Get a Bad Credit Mortgage
Next, you need to create a budget that includes all your income and expenditure. Be honest with yourself here because otherwise you risk thinking that you can afford larger mortgage repayments than you actually can. Include everything you spend money on, down to the coffee you buy yourself on the way to work in the morning. Once you know how much you spend each month, you will have a realistic idea as to what you can afford to spend each month on a mortgage.
Use this figure to start looking at potential mortgages and mortgage lenders. This is a perfect time to give us a call. One of our experienced advisors will go through your finances with you, helping you to work out which mortgages you can apply for and the size of deposit you’ll need. If you aren’t ready to speak to us yet, we have a really useful mortgage calculator on our site that’s free for you to use.
Avoid any hard searches as these could negatively impact your credit score and your chances of getting approved. When you are ready to apply, only apply for mortgages you are likely to get approved for - remember, just because you have bad credit and you’re applying for bad credit mortgages, it doesn’t mean the lender will say yes.
How to Improve Your Credit Score
- Check your credit file
- Make sure you are on the electoral roll
- Make repayments on time
- Reduce your existing debt
- Start building up your credit score by taking out more credit
- Stop applying for mortgages or other loans
Affordability Assessment - what is included?
The Benefits of Working with The Mortgage Hut
Hassle free services that focus on youAt The Mortgage Hut, we work for you, not the lenders. We pride ourselves on offering professional, hassle free services that focus on you as the client. It's our job to give the right advice for your circumstances.
Mortgage industry expertsNot only are our advisers qualified to give advice in the mortgage industry, but they have in-depth knowledge of the sector. This includes knowing the types of mortgages that are available, including the bad credit mortgage sector, and the type of lenders that would be willing to take a risk on a borrower with bad credit. At The Mortgage Hut, we have access to thousands of bad credit mortgages and exclusive products not available on the high street.
Helping to get your Mortgage Application ApprovedBy providing a personal review of your finances, carried out by a qualified mortgage adviser, we can help you to identify any issues in your credit report or financial situation that could impact your chances of being approved. We’ll discuss these with you and how they can be addressed before you apply. We can speak to lenders on your behalf, explaining the situation to them and increasing the chance that they will approve your application. As one of the industry’s leading mortgage brokers, we have good relationships with over 90 lenders, leading to a level of trust that could see them offering a bad credit mortgage to someone they might otherwise turn down because we are speaking on their behalf.
Saving you money & timeWe see the bigger picture - in addition to helping you find the right mortgage deal, our specialist mortgage advisers can save you time and money by offering related financial advice. This may include helping you find buildings and content insurance for your new home or other types of insurance which could reduce the risk of your losing your home if you can’t make repayments, for example, critical illness or redundancy insurance.
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