Bad Credit

If you want to obtain a Mortgage and you have previous Bad Credit, never try to tackle it yourself. Applying to multiple mainstream lenders, unsuccessfully will just damage your credit file even more. In addition, most Specialist Lenders that deal with Bad Credit, will only deal with Mortgage Advisors. This is usually because you need to be provided with Advice and they do not employ Mortgage Advisors of their own.

Some mainstream and High Street lenders will permit some previous Adverse Credit. When your Credit File doesn’t meet the High Street lenders Criteria, this is where we will approach Specialist lenders which specialise in lending to customers with previous Bad Credit.

Ultimately, there are plenty of Specialist Lenders which all have different criteria that they will and won’t accept. The best thing to do when you have previous Bad Credit, is obtain a copy of your Credit Report and speak to a Mortgage Advisor.

If you can’t get a Mortgage straight away, they’ll be able to let you know exactly when you will be able to. There are over a dozen lenders out there, which specialise in lending to people with previous Adverse Credit.

They are actively looking to lend, so if it fits their general criteria and makes sense to them, there’s a good chance they will be happy to lend to you. What’s more, the competition between these lenders keeps their interest rates competitive amongst themselves.

Like with mainstream lenders, just because your circumstances don’t suit one lender, it doesn’t mean it won’t suit others.

As with all Bad Credit Mortgages the greater the deposit you have, the more options there will be for you and the cheaper the interest rate will be. In other words, for every 5% you have to put toward your deposit, the greater your chances are at being accepted.

This can be frustrating, as there isn’t necessarily anything bad on your Credit file. You just haven’t had many or any previous Credit commitments registered in your name.

There should still be options available to you though with most lenders, even up to 95% loan to value (5% deposit) with some.

To help boost your Score, there are a few things you can do which will help:

• Register to vote so you appear on the Electoral Roll – this will instantly boost your chances with every lender
• If you’re not planning on getting a Mortgage within the next 6 months, take out a low Credit limit, 0% Credit Card. Put around £50-£100 per month on it, and ensure you have a Direct Debit set up to repay it each month.

Whether you can obtain a Mortgage with past Defaults showing on your Credit file, will be dependent on when they were registered, if or when they were satisfied (repaid) and how much they were for.

• 5% deposit: some lenders will ignore defaults registered by mobile phone providers. All other defaults will usually need to be registered over 3 years ago. One default, under £500 within the last 1-3 years may be able acceptable with some lenders.
• 10% deposit: defaults over 2 years old, acceptable with some lenders.
• 15% deposit: None in the last 3 months. Up to 2 defaults potentially acceptable within the last 3-24 months. Any number potentially acceptable when over 24 months old.

• 20% deposit or more: None in the last 3 months. Up to 5 defaults potentially acceptable within the last 3-12 months. Any number potentially acceptable when over 12 months old.

Unsatisfied/Not repaid:

• 5% deposit: the CCJ will need to be registered over 3 years ago and usually less than £500 to be acceptable.
• 10% deposit: unsatisfied CCJ’s over 2 years old, may be acceptable with some lenders. 
• 15% deposit: None in the last 3 months. 1 CCJ potentially acceptable within the last 3-24 months. Any number potentially acceptable when over 24 months old.
• 20% deposit or more: None in the last 3 months. Up to 3 CCJ’s potentially acceptable within the last 3-12 months. Any number potentially acceptable when over 12 months old.

• When it was registered
• Whether the DMP has been satisfied or not
• Whether there are any missed payments on the DMP 

Satisfied DMP:
5% deposit or more: providing DMP was conducted satisfactorily and there has been no further adverse since it was satisfied, there will be options available to you. If satisfied less than 3 years ago there will be a couple of lenders available. If satisfied over 3 years ago, there should be plenty of lenders available.

Unsatisfied DMP:
5%-10% deposit: providing the DMP was registered over 12 months ago and there haven’t been any missed payments or other adverse since, there may be a couple of options available to you.

15% deposit or more: if you have at least a 15% deposit, the number of lenders available to you will treble and the interest rates you’ll be eligible for will be much more competitive. As above, the DMP will have to have been conducted satisfactorily for 12 months or more.

Ultimately it is possible to obtain a Mortgage after an IVA or being declared Bankruptcy. Whether you are eligible to apply will be down to when you’re IVA or Bankruptcy was Satisfied and how much of a deposit you have.  

• 5% deposit: will need to be satisfied at least 3 years ago, with no adverse since
• 20% deposit: will need to be satisfied/discharged for at least 2 years, with no adverse since
• 30-35% deposit or more: will usually need to be satisfied/discharged for at least 12 months, although some may consider less than this. No adverse since.

Most lenders are cautious when it comes to lending on a buy to let property when there has been previous adverse. The reason for this is because lenders feel that you are much more likely to want to keep up with repayments on your own home than what you would on an investment property. Therefore, when lending on properties that are to be rented, the lender wants to see that the individual is committed to repaying their debts.

It doesn’t mean there aren’t any options available though. A missed payment here or there within the last 2 years will be ok. And if you have at least a 20% deposit and any Defaults or CCJ’s are over 2 years old, there should be options available.

The best thing to do is obtain a copy of your Credit Report and speak to one of our Specialists, as each individuals’ circumstances are different.

Not at all. Generally, you should aim to take out a fixed rate that will finish around the same time that you will be eligible to move to more competitive mainstream lenders. Your Mortgage Advisor will consider the earliest you will be eligible to Remortgage to a cheaper mainstream/High Street lender, when recommending a Mortgage to you. For example, if all of your adverse will be off your Credit File in 2 years’ time, the aim should be to take out a 2-year fixed rate with the Specialist lender. Then when that ends, Remortgage to a cheaper mainstream lender.