Bad Credit Mortgage Broker
Albion Forest Mortgages – Bad Credit Mortgage Broker.
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What's in this article
What is a Bad Credit Mortgage?
A bad credit mortgage is a mortgage product or lender that is designed to be suited to someone that has had an issue of some sort with their credit in the past. This can be something such as a missed payment, or even more serious things such as defaults and county court judgements (CCJs).
If you have bad credit you will likely need a specialist lender to get a bad credit mortgage that may have a higher interest rate or will limit you to a lower loan-to-value ratio (The amount you can borrow compared to the value of the property)
What counts as bad credit for a mortgage?
Bad credit can include a lot of different types of issues. Some of these are less significant when it comes to getting a mortgage, however, they all could impact your options.
- County Court Judgements (CCJs)
- Debt Management Plans (DMPs)
- Unsecured loan arrears (Missed payments)
- Secured loan arrears (Missed payments)
How can a bad credit mortgage broker help?
Having a specialist bad credit mortgage broker means that they will probably know exactly how to solve your mortgage issues, as they will have dealt with similar issues before.
A bad credit mortgage broker will know which lender is best for your particular situation, and how to package your case correctly in order to have the highest chance of success.
Can you get a bad credit mortgage with a CCJ?
As long as it’s over 6 months old it’s likely you can still get a mortgage. Again if it’s for telecoms it can potentially be ignored. We have a whole article on this here.
Can you get a bad credit mortgage with a default?
You can still get a mortgage with defaults, if it’s for telecommunications it can sometimes be ignored. Generally if satisfied and less than 4 defaults you have options, if they are low value, i.e. less than £500 you can possibly get a mortgage ignoring them. We have an article on defaults here.
What does it mean if you have a bad credit score?
If you have a low credit rating or score you may need a ‘bad credit mortgage’, you may have had some financial problems in the past such as a default, CCJ or missed payments on commitments. There are other reasons you can have bad credit, such as lots of applications for credit, or low credit card limits.
Bad Credit Score – how does it affect your chances of getting a mortgage?
If your score is lower it will be harder for you to get a mortgage. You may have to look at lower loan-to-value ratios or specialist lenders.
How to Get a Bad Credit Mortgage
Step one is you need to check your credit history, you can do this for free at various websites such as CreditKarma or Experian, our preferred site is www.checkmyfile.com as it shows you more information.
Step two is speak to a broker, share your credit report with them if you’re happy too. That will allow them to see what kind of lender you need to look at.
How to Improve Your Credit Score
- Get on the electoral roll if you aren’t already.
- This shows lenders that you have a fixed address.
- Make your payments on time
- If you have existing credit agreements make sure the payments are made on time, every time. Lender’s don’t like late or missed payments.
- Take out a credit builder credit card
- This may have a negative impact to start with, but over time should improve your credit score. Make small purchases and either clear the balance or make the minimum payments each month. Remember though, applying for this will leave a hard search on your credit report, so lenders will see it, and it may lower your rating initially.
- Stop applying for credit, whether that’s loans, mortgages or credit cards
- Counter to the point above, each time you take out one of these types of credit it will perform a hard search on your credit file and this lowers your rating, so if you do apply for a credit builder card, make sure you don’t plan on applying for a mortgage in the near future.
Credit Scores – How important are they and how does it work?
Credit scores are important when trying to get a bad credit mortgage. Your credit score is generally a number that depicts how good at using credit you are, so positives like keeping credit card balances low improve your credit score and negatives like maxing out your credit card lower your credit score.
Can I get a bad credit mortgage if I’m on a debt management plan (DMP)?
If you’ve had or even are in a Debt management plan, depending on your deposit levels you can still get a mortgage.
You will most likely need to speak to a specialist bad credit mortgage broker to discuss your situation and find out what options are available to you and what size deposit you will require.
Can I get a mortgage if I’ve been declared bankrupt or am currently bankrupt?
If this is discharged over 3 years you can still get a mortgage, if less than 3 years, start planning for when you get to 3 years.
Can I remortgage my home with bad credit?
Absolutely, this would be the same as if you were purchasing and the same applies to the questions in this article. When trying to remortgage you generally have 2 options.
- Switch to a new lender
- Select a new product with your current lender.
Generally switching to a new product with your current lender will not involve the same level of underwriting as a remortgage to a new lender. Speaking to a specialist bad credit mortgage broker can really help if you want to change lenders and are unsure if you are able.
Can I get a mortgage with Unsecured loan missed payments?
As long as you have brought the account up to date and have 2 payments on time following the arrears you have options.
I have Payday loans, can I get a mortgage?
Payday loans are not great with Lenders, but as long as you haven’t had any in the last 12 months you can get a mortgage.
Can I get a Bad Credit mortgage with Mortgage Arrears/Secure loan arrears?
Obviously lots of lenders don’t like mortgage arrears, but as long as none in the last 12 months there are options in the mortgage market, dependent on deposit.
Best types of Bad Credit mortgages
If you have bad credit you have a few different options for mortgages, we’ve detailed a few options below.
Fixed rate mortgage
These are probably the most common type of mortgage product. Very simply, you fix your rate so that it won’t go up or down for a certain amount of time. Therefore you know your monthly payments will be the same each month.
Variable rate mortgages
These products will fluctuate, and will be adjusted by the Lender. So your monthly payment could go up or down, depending on the market. These can be good if you are wanting to make changes in the future. This is because they usually don’t have any early repayment charges.
This product usually tracks the Bank Of England base rate. This means when they adjust that up and down, your monthly payments change. Like a variable rate mortgage these might not have an early repayment charge.
What are the benefits of using a Bad Credit Mortgage broker?
Using a specialist Bad credit mortgage broker can be beneficial for many reasons. Usually it can be the difference between getting a mortgage approved, and being left with a decline.
Finding the right bad credit mortgage broker can mean that your case is properly packaged with the right lender, and therefore has the highest chance of success. There are many reasons that using a specialist bad credit mortgage broker is important, such as:
- Speed – A specialist, such as Albion Forest, will generally be quicker as they deal with the same issues every day.
- Lender panel – As they deal with bad credit often they will have a panel of lenders that will be beneficial for people with credit issues.
- Service – Whilst we can’t speak for other brokers, at Albion Forest we pride ourselves on the level of service we offer, as demonstrated by our 5* review rating.
- Exclusive deals – At Albion Forest we get specialist deals that may be beneficial to you when needing a bad credit mortgage.