Getting a mortgage with a low credit score
Fortunately not all lenders in todays very active mortgage market place, base their decision to lend or not purely on your credit score. Credit scoring would apply to nearly all of the more recognised High Street lenders, where you either score enough points or you will be refused a mortgage.
The specialist lenders who have come to the market tend to use the more traditional route of a manual underwrite to see if they are prepared to lend. If we get the right response lender’s then use their own internal credit score to see what products would be available to you which would reflect on the loan to value and the terms of the product.
With our knowledge of the market once we have all of your personal information, we are able to see very quickly if we can help you and what products maybe available to you. This will allow us to produce an illustration for you to consider, and if you are happy with the terms we can then progress to running a decision in principal to satisfy the vendor, or the estate agents that you have a mortgage in place, subject to the normal references and a satisfactory survey.
It would help to speed up the process of making an application, if each applicant has an up to date copy of their credit file in order that we are seeing exactly the same level of information as the lender’s underwriter will base their decision on.
You are entitled to have access to your credit file for a one off payment of £2, and you will find some credit agencies will offer you a one month free trial.
When you have accessed you credit file it maybe helpful to see if there are any incorrect entries that maybe impacting on your credit score and if you can make any changes to improve your current position. It maybe something as simple as you are not being found on the electoral roll or you are using a high percentage of your available credit limits. If you are using more than 50% of your credit limit on a regular basis this will have a negative impact on your credit score, as it would imply that you are not managing your credit correctly. You should also avoid at all costs the use of what maybe seen to be a Pay Day Style Loan. The companies in this market have realised that they are not seen in a good light and are in some cases spreading the loan over a few months. Lenders have seen this and are now looking at the interest rates being charged, which very quickly identifies the type of loan as the interest rates are normally 20% plus. This is an area to stay well clear of. Making sure that you make all of repayments on all of your credit agreements on time is essential to maintaining your credit profile.
We look forward to seeing how we may help you get a mortgage application agreed quickly, and on the best possible terms to fit your credit profile.
More on Mortgages with Low Credit Scores
We specialise in getting mortgages for people with a low credit score. We are experts in finding the very best deals for impaired or adverse credit mortgages regardless of your credit history.
Having a low credit score can leave you feeling stressed and uncertain about the future, however there are still options open to you and we know how and where to find them.
You may have a bad credit score because you have missed payments or made late payments on any form of credit agreement, have been involved in any type of debt management plan, have been discharged from bankruptcy, have defaults or an individual voluntary arrangement.
If any of these instances have happened to you in the past 6 years then the chances are that you do have an adverse credit rating. The first thing to do is check with any of the three main credit agencies www.experian.co.uk, www.equifax.co.uk and www.noddle.co.uk. This will allow you to see how you may be viewed by the lenders underwriters and to make sure that your file is correct and gives a true reflection of your current credibility.
We can find you a mortgage, even if you have a low credit score. Interest rates and initial charges may be marginally higher, as you are seen as being of a higher risk than someone with a strong credit history. However, you will find that after having had a mortgage for 12 months, and paying your mortgage on time, together with any other credit arrangements that you have, your credit score will start to repair itself.
Many mortgage products for adverse or bad credit are written over a two year period, which means that you could be in a position to qualify for a far more competitive product at the end of that term.
We deal with Specialist lenders whose decision making is not solely based on a credit score. Rather, they take a subjective approach, looking at the applicant’s individual situation and creditworthiness, as well as applying sensible underwriting rules.
There are different levels of mortgages available to people with low credit scores. If you have missed a couple of credit payments of any sort in the past, then you will be perceived as being ‘near prime’ or ‘light adverse’ and will tend to pay just slightly higher than the standard rates. If, however, you have been recently discharged from bankruptcy or have acquired county court judgement, then you will be seen as a much higher risk and will subsequently encounter much higher rates of interest.
Lenders who will consider adverse credit mortgages will take into account when the adverse credit occurred, is it satisfied, and the amount of deposit you have. The more historical the adverse credit is, and the larger deposit you have, the more attractive the terms of the mortgage will be.
Our first piece of advice to you would be to fix your credit score as much as you possibly can. For instance by making sure that you are on the electoral role and by closing any credit accounts that you no longer use. Show lenders that you are a responsible borrower by making payments on time and where possible, pay off your credit cards each month. Make sure that you do not exceed more than 50% of any credit agreement. Finally, go through your credit score results and make sure that all the information is correct and resolve any errors.
Once satisfied, let us find a mortgage for you. Whether you are a first time buyer, looking to move house or to re-mortgage, we will be delighted to assist you. Give one of our friendly team a call today on 03452 605506 to discuss your options.
The overall cost for comparison is 5% APR. The actual rate available will depend on your circumstances. Ask for a personalised illustration.