Adverse Credit Mortgages

Adverse credit is the term used by mortgage lenders to describe something negative on your credit file.

Mortgage lenders and other creditors will assess whether they want to lend by looking at how you have conducted any borrowings in the past. If you have had a regular history of credit problems then this history will show on your credit file and you will find it harder to borrow.

The recent credit problems on the world market have caused lenders to re-examine how they are lending. This has made it harder to get a mortgage.

Most lenders use an automated system of credit scoring to assess potential clients. This system has proved statistically reliable for the lenders but does not take into account individual circumstances. This system automates the application process and reduces the likelihood of mistakes

If you have had an application for a mortgage declined then unless you know the reasons for the decline you will need to look at your credit file.

Mortgage lenders generally use two credit reference agencies to query your credit worthiness. These agencies are Experian and Equifax

These agencies make it their business to gather credit information about everyone.
You can request sight of your credit file by asking either of the above companies. Both companies should hold identical information.

The credit agencies may apply a credit score to your situation which provides a snap shot as to how easy it may be for you to obtain credit. They may also highlight particular credit problems

We have described the more common credit problems with links to further information

Arrears

Arrears with a current or previous mortgage are taken very seriously by mortgage lenders. The more recent the arrears the more difficult the mortgage is to place. Mortgage lenders are interested in the following:

How long ago did the arrears occur.
How many months were the payments behind
Over how many months was the mortgage behind

If you have had arrears with mortgage payments, loan payments or rent arrears then contact us together with details of these missed payments to discuss your mortgage options

If you have current arrears then it will be possible to remortgage however the interest rates offered will be above high street rates and will reflect the increased credit risk 

read more about mortgages with arrears
 

Defaults

Default notices are issued to holders of credit agreements where a sequence of payments have been missed. They are regarded as quite serious and you will need a minimum 10% deposit.
As with all credit impairments the more recent the default occurred the more serious it is taken.

read more about mortgages with defaults
 

County Court Judgments (CCJ)

Unless the CCJ is small (less than £250) and over 1 year old then you are likely to need an adverse credit mortgage

The older any CCJ's are the less effect they will have. Once any CCJ is over 6 years old it should come off your credit file

It is not always necessary to settle a CCJ prior to taking out a mortgage although it will help if you have done so.

read more about mortgages with county court judgements CCJ
 

Bankruptcy

If you have been made bankrupt, you will not be permitted to take out any credit until you have been discharged. If your partner has been bankrupt, it is likely to affect your mortgage application unless you can show that there is no financial connection between the two of you.

We can arrange mortgages after the bankruptcy is discharged.

read more about mortgages and bankruptcy
 

Action

Rejection by one mortgage lender does not mean that a mortgage is unavailable, there are several lenders who specialize in this market. Most adverse credit lenders offer their products through authorized mortgage brokers, such as ourselves.

To enable us to properly source your enquiry you should complete our fact find giving us as much information about the nature of the credit problem.

In particular:

The date when the arrears/default/CCJ occurred
The amounts involved or monthly arrears
Whether cleared or not and when cleared
The reason for the credit problem
 
The information provided above provides a guide to lending criteria. The offer of a mortgage depends on your circumstances as a whole.

You should complete the fact find for a full appraisal of your situation.