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Mortgages with Poor Credit

If your credit score is low for whatever reason – perhaps an adverse credit even in your past, or maybe even a lack of credit or borrowing activity – then you’ll probably need to look into your options for a mortgage with poor credit. A ‘poor credit mortgage’ is a term to describe products specifically designed to help people with a low credit rating, or one or two adverse credit events on their financial records, to access the finance they need to purchase their own property. 

‘Poor credit’ can also be referred to as ‘adverse credit’ or ‘bad credit’. If your credit history includes events like missed payments, CCJs, IVAs, default notices or repossessions, then you will have a ‘poor credit rating’. This will negatively impact your chances of getting a mortgage through mainstream lenders, who are notoriously risk-averse and typically decline applications from potential borrowers with anything but a spotless credit report, as obtained through the three main UK credit reference agencies – Equifax, Experian and TransUnion. 

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You’ll find that poor credit mortgages are usually offered by specialist lenders catering to the needs of people with a poor credit rating, for whom the mainstream lenders are no longer an option. However, you won’t find specialist lenders or their products on the high street or listed on any online ‘best buy’ tables. They don’t generally deal with applicants directly, preferring instead to work through professional intermediaries (such as expert unlimited mortgage brokers), ensuring that borrowers have been assessed prior to application and their products will be a good fit for customers. 

To get the most favourable deal on the mortgage that best suits your specific circumstances, you’ll need to get help from a specialist mortgage broker who is familiar with all the many lenders and poor credit mortgage products available on the UK market. Once they’ve taken a good look at your situation and what you want to achieve, they’ll know exactly which provider will work best in your current circumstances and support you through the entire process to make sure everything goes smoothly.

Can I get a Mortgage with Poor Credit?

You might have picked up one or more bad credit notices on your financial history – perhaps through no fault of your own – and this poor credit rating could mean that many mortgage providers will not be willing to offer you a home loan when you need it most. However, just because you’ve been declined by high street lenders, it does not mean that you cannot get a mortgage with a poor credit history.

There are now several specialist poor credit mortgage lenders in the industry who, in response to the tighter criteria used by mainstream lenders (and the subsequent squeezing of those with poor credit out of the market) have set up to specifically help people in your situation. As more of these specialist lenders have entered the market in recent years, rates and conditions for this type of lending have become more competitive, so while a so-called ‘poor credit mortgage’ will still be more expensive than a standard product, is not quite as bad as it once was.

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We can never guarantee individual outcomes when it comes to a mortgage application, but, in the current climate, a potential borrower with a poor credit record has a very good chance of getting the mortgage they need. And their chances are much improved when using a specialist broker with a deep understanding of the market to help them with their application and guide them towards the best deal available, often with exclusive rates.

Poor Credit Information

Mortgage Rates with Poor Credit

Mortgage rates will vary from lender to lender, and between differing products, especially when it comes to a mortgage with poor credit. Having a poor credit history, or perhaps very little or no borrowing history at all, can have a big negative impact on your ability to secure a mortgage from a high street provider, and if you do succeed then the interest rates will not be competitive.

Fortunately, with the growing number of specialist lenders in the market catering for people with a poor credit record, we should be able to match you with the right lender and product to meet your needs. It’s worth remembering that interest rates on specialist mortgages like this will always be slightly higher than those available to borrowers with a healthy credit history, but as time passes, and your adverse credit events become more historic and therefore carry less weight – especially if you have been maintaining a clean record since – we should be able to renegotiate your mortgage deal with better terms.

What is Poor Credit?

If you’ve been unfortunate enough to experience financial difficulties in the past, which has led to issues with paying off instalments on loans or your mortgage, or settling balances on any credit accounts. Then these events will have been noted on your credit records and had a negative impact on your credit score, with the knock-on effect of you having ‘poor credit’. 

This is also known as ‘bad credit’ or ‘adverse credit’, and means that lenders will see you as a higher risk than those with a clean credit history after they have run a credit check. 

Poor credit can take many forms, each carrying their own level of severity and associated effect on your chances of a mortgage or the deal a lender will be willing to offer you, ranging from just a few late or missed payments on your phone bill or catalogue account to default notices, County Court Judgments (CCJs), Debt Management Plans (DMPs), Individual Voluntary Arrangements (IVAs), bankruptcy and repossession. Your creditors or a court will have registered these events legally, leading to the three main UK credit reference agencies –  Equifax, Experian or TransUnion – noting them and including them on their reports. 

Aside from noting their existence, the agencies will also score each of them against any other activity in your credit history and produce a final credit score for lenders to refer to when making a decision. What’s interesting is that each agency scores your credit events in different ways, so it’s not always easy to compare, but the mainstream lenders will generally make their judgements based on the three scores alone. In contrast, niche-market specialist lenders will usually adopt their own methods for rating your performance as a borrower, often looking at the context of the adverse credit events rather than simply their existence and a numerical score. 

Having poor credit, and therefore being classed as a greater lending risk, will unfortunately have an effect on your ability to get a mortgage, as well as other loans or credit arrangements. Your awareness of your poor credit rating may depend on how severe your default was – many people sail through life blissfully unaware of their poor credit rating due to a few late payments or a lack of borrowing history, and might only become aware of it for the first time when they encounter a problem when making a mortgage application. 

It’s worth making checks on your own credit rating regularly, especially if you anticipate making a house purchase or taking out a loan in the near future, to establish if you have poor credit. If you know where you stand in advance, you’ll have the opportunity to take steps to put it back on track. 

How Do I get a Mortgage With Poor Credit?

To take positive steps towards getting a mortgage with poor credit, the first thing you’ll need to do is acknowledge you have an issue with your financial history – whether this is in the past few years or fairly recent. This will allow you to take stock of your situation, avoid making further applications to high street lenders that carry a high chance of being rejected (and therefore further damaging your credit score) and seek professional help from a specialist mortgage broker. They’ll use their expertise to analyse your credit records and advise exactly what your options are going forward, saving you a great deal of time and effort.

It’s worth remembering that not all mortgage brokers are the same. Many brokers are tied to specific financial groups or a particular folio of products, so while their advice will be perfectly competent, the mortgage deals they can source or recommend will be somewhat limited. To understand all your options for a mortgage with poor credit, you’ll need to work with an unlimited mortgage broker who has access to lenders across the whole spectrum of the UK market, from high street providers to specialist lenders who only accept applications through trusted brokers. 

A specialist broker such as this will have valuable insights into the current mortgages landscape and an in-depth knowledge of individual lenders’ criteria. This means once they’ve taken a good look at your situation, they’ll know which lender will have the right product to meet your needs, will be most amenable to your case and may even be able to enquire informally ahead of an official application to negotiate a deal on an exclusive basis. 

To further help your chances to get a mortgage when you have poor credit, and possibly improve the deals or rates that will be open to you, there are a number of measures you can take, including: 

  • Pull together a larger deposit
  • Check your own credit reports for any mistakes
  • Pay off as many debts as possible
  • Cancel any credit accounts you don’t use anymore
  • Use a savings account to put by what you can each month
  • Take out a credit card and use it for household spending (but remember to pay off balances on time and in full each month!)
  • Make sure you are on the electoral register 

To find out which might be most relevant to your case, get in touch with one of our team today, and an advisor will be able to go over the options.

Poor Credit Mortgage Lenders

In our role as advisers and brokers to individuals with a poor credit history, we have significant experience in working with people on both sides of the equation when it comes to mortgages with poor credit.

Potential borrowers often come to us with adverse credit events on their records, where only a specialist mortgage lender will have the solution to their needs. In the course of business, we have built up an in-depth knowledge of and excellent relationships with the network of specialist lenders around the UK, meaning we are able to approach them somewhat informally in the first instance to canvas opinions and reactions to all kinds of potential situations customers may be in.

These specialist lenders have a greater understanding of what an adverse credit event can mean, and a more pragmatic, flexible approach to the application, often paying personal attention to an individual applicant’s circumstances. They know exactly what a County Court Judgement (CCJ), Individual Voluntary Arrangement (IVA), bankruptcy, default, repossession or missed payment of any sort can entail, and the degrees of severity that can exist within each case. They’ll set their criteria to take specific events into account.

The interest rates offered and deposit required will depend on their final assessment of the overall risk, and will usually be slightly higher than standard mortgages. However, with time, and the rebuilding of a healthy credit history, we would work towards improving the terms in the long run. After all, nothing stays the same for long.

Poor Credit Mortgage Advice

If you’re looking for a mortgage with a poor credit record, it’s likely that you’ve experienced some disappointment with mainstream advisers and providers, and will be wondering where else you can turn to for help. The truth is, to get access to the mortgage you need, it’s vital that you get solid, professional advice from an experienced adviser and broker with a complete overview of the UK mortgage market. 

There are a number of alternatives to high street providers when it comes to getting a mortgage, all operating in the specialist area of the industry. These niche-market lenders specialise in lending to people who have experienced a variety of financial issues in the past, and will take a far broader view of your circumstances than their mainstream counterparts. However, as they don’t deal directly with the public, you will not be able to find them yourself online or compare their offers. 

Specialist lenders exclusively take applications made only via trusted third parties, such as established mortgage advisers like ourselves. As unlimited brokers, we have access to over 12,000 mortgage products available from around 90 lenders. With our knowledge of their individual criteria and conditions for lending, we’ll know precisely which one will be most sympathetic to your application and have the most suitable deal to meet your needs. 

We’ll take a close look at your whole circumstances to understand any issues you have had in the past and what you want to achieve with your current property purchase. As we enjoy great relationships with lenders from across the board, we are often able to make informal approaches before making an official application, to see if terms could be improved in your case, or if there might be any movement in the interest rate. Even a reduction of 0.1% can mean a saving of thousands of pounds over the course of the loan. And if everything is acceptable to you, we’ll help you with your application and ensure the whole process runs as smoothly as possible. Give us a call today to find out what advice we’d give in your circumstances.

Can I Remortgage With a Poor Credit Score?

Just as is the case with a new mortgage, it is entirely possible to remortgage your property while you have a poor credit score – you just need to know the right lenders to approach. While mainstream banks will generally shy away from applicants who have anything other than the most conventional patterns of borrowing and most acceptable of credit ratings, there are a large number of specialist mortgage lenders in the market who have more flexible criteria and will pay attention to all the information within your credit report and not just your numerical credit score.

Many lenders on the high street will use their own credit scoring systems to ‘grade’ applicants, as well as (or sometimes rely on) the scores provided by the three main UK credit reference agencies – Experian, Equifax and TransUnion. The problem with this approach is that many providers and their advisers have become accustomed to simply using those scores by themselves as a guide, without looking into the details, and checking what an applicant’s current credit management looks like, and what steps they may have taken to improve their credit score, if they have experienced issues in the past or do not have much of a history of borrowing. 

However, the many specialist lenders in the market will tend to ‘credit search’ rather than ‘credit score’, and will look deeper into the patterns and behaviour within your credit report to check that your conduct in each area meets their criteria for borrowing. These lenders will spot a consistent recent credit history and will be far more receptive to your mortgage application than their mainstream cousins. With a huge amount of experience in dealing with mortgage and remortgage applications for people with a poor credit score, and good relationships with providers across the spectrum of the UK market, our team at The Mortgage Centres will know exactly which lender to approach to meet your needs and will help you frame your application in the best light. Get in touch today to find out your options.

Should I use a Mortgage Brokers If I have Poor Credit?

If your credit rating is currently affected by one or more items of poor credit in your financial history, then, without a doubt, you should use a mortgage broker to give yourself a far better chance of obtaining the most competitive deal to meet your needs. 

Approaching mortgage lenders yourself with examples of bad credit on your files will often result in a refusal – this is because the providers you are able to contact will be those in the mainstream, who are typically very risk-averse and generally unwilling to lend to people with even the slightest blemish on their records. Unfortunately, a string of declined mortgage applications  – and the associated credit checks will also risk further damage to your credit rating. 

Using a mortgage broker will ensure you don’t waste your time and energy (and credit score) contacting lenders who won’t accept your application and are a bad fit for your circumstances. If you have bad credit, a responsible broker will take time to go over your situation thoroughly in order to identify which lenders to approach – usually, these will be from the specialist mortgage sector – and will use methods of assessment that mirror the lenders’ own.

They’ll want to look at the exact nature and context of the event, how long ago it took place, whether it was settled and how your approach to credit has changed since – as well as the value of the prospective property, your affordability, the deposit you can supply and more. And they will also help to frame your mortgage application to put your finances in the most favourable light, to give you the greatest possible chance of success. 

An unlimited mortgage broker, like ourselves at The Mortgage Centres, will have access to the wide range of specialist lenders who are more likely to consider your application and take a broader view of any bad credit that might appear on your records. These lenders will only accept applications made via established brokers or advisers, so it is definitely in your interests to use a mortgage broker to obtain the right mortgage to meet your needs. 

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