Having anything less than an immaculate credit history could harm your chances of getting a mortgage. It is estimated that as many as one in four people, the equivalent of five million households, would be refused a conventional, high street mortgage because they’re suffering from bad credit, despite often being totally oblivious to the damage that’s lurking in their credit file.
You can get a black mark against your name for a number of reasons. You could have paid a utility or council tax bill late or had problems keeping up with a credit card or loan payment and picked up County Court Judgments (CCJs) which can tarnish your record for six years. Maybe you had difficulties coping with the financial rigours of student life. A problem might have been triggered by arguing about payment of a bill with the issuer or an innocent mix up over direct debits. Problems might be as serious as bankruptcy or a home repossession due to unpaid debts.
A specialist broker can help you get a mortgage even if you have:
You might be refused lending through no fault of your own. Problems are often provoked by bereavement or redundancy. You might be recently divorced or have lived abroad for some time and simply have no credit history. Your credit rating is likely be blemished if you got into financial difficulties in the past and missed a bill payment or two.
Businesses can fail, as they did in their tens of thousands in the recession of the early 1990s and the more recent recession which originated from the banking crisis which began in 2007. Not many of these commercial casualties were to blame for their predicament – wider economic factors were the guilty agent, so perhaps you're recovering from past financial turmoil and are now looking to take out a mortgage.
Times are certainly tougher for borrowers who do not score heavily on a standard automated credit scoring system. Before the credit crunch, a number of lenders were almost falling over themselves to extend finance to individuals irrespective of their credit history. Many of the specialist lenders that did exist, like Preferred Mortgages have now closed their doors to new subprime business, while others like Kensington Mortgages - once known for being one of the heaviest bad credit lenders - have become much more conservative.
The good news is that there are a few mainstream and specialist sub prime lenders out there who are sympathetic to people with a bad credit score. There have even been one or two new entrants to the market including Precise Mortgages which launched in 2010 to plug the gap and they offer a range of competitively priced mortgage deals to those rejected by the high street mortgage lenders. Precise Mortgages offers a range of residential and buy-to-let products for customers with varying credit profiles and does not automatically decline those who have low credit scores, defaulted on a previous mortgage, been in arrears or have a CCJ against their name.
Like many of the specialist lenders, Precise Mortgages is an intermediary-only lender, which means that its deals are only available via mortgage brokers. This is because the lender feels strongly that borrowers should seek full professional advice before taking out any mortgage, and particularly if your requirements and/or credit record are complex. It is an interesting point that according to the Council of Mortgage Lenders, well over 50% of all mortgage borrowers choose to use a professional broker to arrange their mortgages these days, and that proportion has grown since 2007, as borrowers are perhaps more careful and cautious when it comes to their financial arrangements, and good advice is appreciated more than ever before.
If you are already a homeowner with an adverse credit mortgage and are coming to the end of your deal, you could find you are now out of the woods altogether. If you have been paying an adverse 'credit repair' mortgage with no blips for two to three years, high street lenders may now look at you in a different light. You should have proved yourself enough to re-enter the mainstream market. An expert mortgage broker will be able to advise you on your particular situation.
The majority of lenders who have a more flexible approach to lending take on their new business primarily through mortgage brokers. So if you have a bad credit history you need to source a broker who has expertise in assisting those with less than perfect credit history. There are a few brokers dedicated to offering advice in this area such as Mortgages 4 Bad Credit, Steven Neale and Find the Perfect Mortgage who can help people with bad credit including CCJs and defaults. As brokers they'll have experience at arranging mortgages for people with a poor credit rating. It costs you nothing to see what products are available and what your options are. They'll guide you to the products that are right for you.
Your home may be repossessed if you do not keep up repayments on your mortgage
A FEE MAY BE PAYABLE TO THE BROKER FOR MORTGAGE ADVICE IF YOU PROCEED WITH AN APPLICATION, OF UP TO 1% OF THE LOAN AMOUNT. THE BROKER WILL PROVIDE YOU WITH DETAILS BEFORE YOU ARE ASKED TO COMMIT.