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Your complete guide to Bad Credit Mortgages

Take a read at important topics written by Bad Credit Mortgage Brokers.
Our Bad Credit Mortgage guide details all you need to know about purchasing or Re-mortgaging a Property.

BAD CREDIT MORTGAGES – MORTGAGE BROKER

Bad Credit Mortgage brokers will source FCA qualified advisers who have years of experience and expert knowledge in the mortgage industry. They are Bad Credit Mortgage specialists who have helped thousands of people get a mortgage with Bad Credit. Their knowledge and expertise is second to none. From understanding the complex criteria’s to the in-depth mortgage application process, they can guide you through this mind field with ease. Bad Credit mortgage Brokers will introduce you to experts who will put your mind at rest and guide you from start to finish.

Bad Credit Mortgage Brokers will introduce you to FCA qualified advisers who have up to date information and criteria on each lenders at the touch of a button. Not only that, Bad Credit Mortgage Brokers source experts who can find the right mortgage based on your circumstances. So don’t worry if your situation is complex, at Bad Credit Mortgage Brokers we will help you find a way.

Applying for a mortgage can be a daunting prospect for most people, whether you’re a FIRST TIME BUYER, SELF-EMPLOYED or someone who is REMORTGAGING. Customer experiences, from either applying or just looking to get a mortgage, have explained how stressful they have found the whole process. The added pressure of credit issues can make the thought of getting a mortgage very deflating, but with the help from Bad credit mortgage brokers we can relief your stress.


BAD CREDIT MORTGAGE EXPLAINED?

High St Banks rarely offer customers a mortgage with bad credit, and it is usually a specialist and boutique lender who would consider your situation. Depending on your circumstances the specialist lender may offer a mortgage with a higher rate or a bigger deposit. Each person has varying issues with their credit and one does not fit all. It is important to understand that there are many boutique and specialist lenders offering different products and rates so it doesn’t mean just because your credit is bad you will be paying higher monthly payments.

Specialist lenders often look at your circumstances and how you got there, rather than just decline based on your credit score or history. In some instances having a good income and bigger deposit can help your chances of getting a mortgage. Sometimes this is not the case, at Bad Credit Mortgage Brokers we will introduce you to the industry experts who can still help.

Bad Credit Mortgage Brokers only match advisors who have extensive experience in finding the best possible mortgage for your individual circumstances. Large majority of the cases have been with specialist lenders who offer similar rates as the High Street Lenders.


WHAT DOES BAD CREDIT MEAN?

In simple terms, Bad credit is whenever you take out any form of credit such as, loan, Hire purchase, credit card, mortgage or anything that constitutes a financial agreement and you have failed to make the payments on time or not paid at all.

If you have missed a certain amount of payments this a breach of contract and is recorded. The missed payments are registered by the companies who you have a credit agreement with. They will in turn inform the credit agencies and create a credit report in your name. Each missed or late payments will have a negative impact on your credit score which the lender will review when taking out a mortgage.

Bad credit mortgage brokers will find experts who have access to specialist mortgage lenders who can review your credit report even with your adverse history and apply common sense lending.


MY CREDIT REPORT

Credit agencies like Experian and Equifax keep a record of all the financial agreements you have taken out during the last 6yrs. Each record will show all your current and past credit lenders. The report will show detailed information on any payments which you have failed to make and how many you have missed during that particular agreement. Defaults, County court judgements, bankruptcy and your address history is also recorded.

Your credit report helps mortgage lenders and banks assess your financial background by seeing how you are managing your credit. This will give them an idea of the type of client they will be lending too.

Your consultant recommended by Bad Credit mortgage broker will request your credit report as this is very important when assessing what mortgage product and lenders they can source for you. It gives your bad credit expert the opportunity to look at your credit history to identify in detail what and when the issues occurred. The detailed report is needed as different mortgage lenders have different criteria and product depending on the history of the bad credit.


WILL I QUALIFY FOR A MORTGAGE IF I HAVE BAD CREDIT?

The answer to this question is YES.

Your situation may be complex and difficult but not impractical. Affordability of the mortgage will be key when assessing your particular information, especially the scale of your credit issues.

There are a variety of specialist and boutique lenders who can consider your situation depending on your credit history. Even if you are bankrupt the lenders can still look at your situation as long as the bankruptcy has been discharged over a specific time, in most cases at least 36 months before they consider the applicant. In some instances it would mean paying a bigger deposit and a higher interest rate.

That’s why it’s important to speak to our Bad Credit Mortgage specialist brokers who can direct you to the right lender. Applying for a mortgage will leave a footprint on your credit file and Our Bad Credit mortgage advisors have seen clients apply for mortgages, but by the time the go the lender that they should have applied in the first place, they are declined due to so many credit searches on their file. That’s why Bad Credit Mortgage brokers will put you in touch with experts and steer you through the whole process.

Key points for credit issues which lenders always like to identify are:

  • What were the missed payments for (credit card, loan or mortgage?
  • How many missed payments?
  • How regular were the missed payments?
  • Have the payments been paid or still outstanding?
  • The month and year they were registered on the credit file

By assessing your credit file a Bad Credit Mortgage Advisers can explain what lender is right for your particular needs and circumstances. They will choose the lender based on the credit file and allow you to have more of a chance getting the mortgage application approved.

The Specialist lenders have different products and rates for each situation so it’s the job of Bad Credit Mortgage Brokers who introduce you to industry specialists who will best match your credit issues to the right product that each mortgage lender is offering.


ARE LENDERS CONSIDERING CUSTOMERS FOR MORTGAGES WITH BAD CREDIT?

There are quite a few specialist and boutique lenders offering competitive rates and products to suit clients with bad credit. So it’s quite important to find the right mortgage to help get your credit back on track. A Bad Credit Mortgage advisor will find the lender or bank, best suited to the individual’s circumstances so the credit file will be an important piece of information you can provide to the specialist broker to find the best deal on the market.

0 – 6 Months 7 – 12 Months 1 – 2 Years 2 – 3 Years 3- 4 Years +4 Years
Late Payments (personal loans / credit cards / store cards/ other unsecured credit) Maximum of 2 missed payments allowed on each credit commitment YES( No Maximum) YES( No Maximum) YES( No Maximum) YES( No Maximum) YES( No Maximum)
Missed Rent Payments (First Time Buyer) No YES( 3 Maximum) YES( No Maximum) YES( No Maximum) YES( No Maximum) YES( No Maximum)
CCJ (County Court Judgement) No YES (Subject to amount) YES ( if 36 MONTHS ago will ignore) YES YES YES
Defaults Help to Buy Only (Subject to lenders discretion) YES (Subject to LTV) YES (Subject to LTV) YES YES YES
Debt Management Plan / Debt Arrangement plan Yes Yes Yes YES YES YES
IVA No Very Unlikely Help To Buy Only (Subject to lenders discretion) Achievable but high deposit needed YES YES
Bankruptcy No Very Unlikely Help To Buy Only (Subject to lenders discretion) Achievable but high deposit needed Achievable with good deposit Achievable with good deposit
Pay Day Loans No No 0 In last 12 months All outstanding loans to be cleared Yes Yes Yes

CREDIT ISSUES EXPLAINED & ACCEPTED

Late Payments

This will be shown when you have not made the payment on the day it was due to come out of your bank. Even though you may have paid it the next day or the following week it can still be shown on your credit file as late payment (L)

Missed Payments Credit Cards / Hire Purchase / Bank Loans

A payment is recorded as missed when it is not made on the particular date to which you have agreed to come out of your bank. The finance company will sometimes try a second time 10 days later and if the payment is not made, it is then recorded on you credit file as (1) or missed. Indicating you are a payment behind, this number will only increase the more payments you miss on the credit agreement. So if you missed 4 payments they would show (4) stating the amount of payments you are behind on that particular agreement. Even if you catch up and make the payment the following month the missed payment will show for that particular month.

Missed Mortgage Payments

Having a mortgage payment missed on your credit file does have quite an impact and is recorded on your report very similarly as any missed payment. However it’s secured against your property and lenders class this as more concerning factor on your credit history.

Arrears Unsecured / Secured

An arrears is another term for a lender / bank to call a missed payment. The stark difference between the two arrears is that one is secured against a tangible asset and the other is not.

Unsecured arrears would be your credit card, bank loan, finance that is not secured against anything. Lenders for these types of borrowing will only consider income as the main source of you getting the credit card or loan amount. There aren’t normally many checks and is a lot easier to get than a secured loan

Secured arrears would be on loans which are secured against something you can physically touch. Property, land or equipment would be an example of this type of credit agreement. These types of applications can be more rigorous and finance companies will ask a lot more questions and often want you to forward documents to show proof. In most cases they can be lengthy processes before receiving the funds.

Defaults

When you take out credit you enter into a legal contract which states you have to adhere to the credit agreement. A default normally arises when you have missed between 3 to 6 payments consecutively. You have broken your credit agreement and by contract law and the lenders are able to record a default on the arrangement.

It is always prudent to contact your finance company if you’re having trouble keeping up with payments. In most cases we see customers tend not to contact there finance company and this escalates the problem.

It is important to take in consideration that if you have a secured loan and you have a default on your secured loan / mortgage then by law which is stated in the contract they can take ownership of what the credit is secured on property, car, Land. This can happen so its important customers are aware lenders sometimes take these actions.

CCJs – County Court Judgement

A CCJ is an abbreviation for County Court Judgement (CCJ). This can be registered to your credit file by anyone who you owe a debt too, so a company or an individual can register this against you. More often it is seen on your credit file after failing to pay your credit agreements due to considerable number of missed payments. The creditor will proceed with court action after a certain time depending on your particular agreement. If you are found by the court to be responsible for owing the debt then they would registered a court judgment against you which will be on your file for up to 5years.

CCJ Unsatisfied

CCJ are often unpaid on the credit report because the client has not paid the debt or not willing to pay due to a dispute. Whatever the reason if the CCJ has NOT been paid back then this would be classed as an UNSATISFIED CCJ.

In some cases the client has not been made aware of the CCJ until they check their credit file. This often occurs when people move home and the creditors are chasing them at the old address and the new one has not been provided to the creditors.

CCJ Satisfied

This will appear on credit file when the debt has been fully paid to the creditor. This for some mortgage lenders is very important that the CCJ has been satisfied over a certain period. The longer the CCJ has been satisfied the more favourable terms and interests rates the lenders will offer.

DRO Debt Relief Order

A Debt relief order can only be obtained if you have very low income and with little in assets, then there is possibility you can have your debts written off. This order will last for one whole year. During which time you are unable to obtain a mortgage.

Individual Voluntary Arrangement ( IVAs)

This arrangement can only be set up by an insolvency practitioner who will assess your situation and legally set an agreement with your creditors. The term arrangement will normally be around 5/6 years depending on your circumstances.

The set amount will be paid to your creditors based on working out the most affordable payment you can make each month. The companies will have to agree to this plan and in most cases the creditors will not get the full amount owed after the term.

Some insolvency practitioners normally add their fees into your monthly payment so it’s always good to ask how the practitioner will take thier fees.

Any monies you receive from inheritance or any large sums during this agreement will and can be used to pay off the IVA. If you are receiving a lump sum during this plan we would say it is important you get advice from reputable credit advisory companies.

Debt Management Plan (DMP)

This plan is to help individuals obtain an arrangement with their creditors at a more manageable monthly payment. This is assessed by their current circumstances and evaluated on what monies coming into the household and what is being spent. The Debt Management Company will assess this before going to your creditor as this will help them put forward your case and allow you to get the agreement approved. There can be several creditors that the Debt management company will need to contact depending on the financial commitments you have made. What normally happens is the creditor’s freeze your interest and you make payment a lot lower based on your affordability.

The important factor to note in a debt management plan is that it allows you to make reduced payments on non-essential debts such as Credit Cards, Personal Loans or Overdrafts.

Agreeing to take out a DMP does affect your credit file and you need to be aware that this may affect future applications for credit. DMP can run for 3 to 5 years to pay off your debts and some client have even been able to clear their debts after a year by offering a lower settlement figure. Creditors often agree to the terms and reduce the payments and freeze interest, however they don’t have to agree to the lower monthly payment but its good practise to still send them the reduce payment.

Repossessions

When taking out a mortgage or Credit agreement for certain equipment the lender is often the first charge on the property. Meaning they have the power to obtain this from you legally if you do not meet your contract obligations. Repossessions are often the last resort for lenders or creditors but missing several payments for long periods without any explanation or commitment can lead to court action. Lenders will use court proceedings to repossess the property or equipment. Once the property or equipment is obtained by the lender / bank they will then sell it to recoup their money. In most cases this is at a reduced price to minimise their losses. Mortgage lenders / creditors can still come after you for any additional costs they incur if they have not recouped all the money owed.

Bankruptcy

This is quite literally the final straw for an individual to declare that they are unable to meet all their credit agreements. By applying for bankruptcy all your debts can be written off from secured to unsecured and more importantly you will not have any creditors chasing you for payment or adding further charges or interest on your agreements. By legally going bankrupt creditors cannot chase you for the money in court and you legal obligations to them will end.

There are quite a few negative factors when declaring yourself bankrupt so it’s important you are aware and need advice when considering this option. This will have huge impact on your credit file and remain there for 6 years. Property, equipment and in some cases your job can be effected by taking this action but for some, it can be the only option.

No credit history

There have been many cases when customers have never had any credit, while this can be hard to believe in this climate, it has come up on many occasions. Lenders find this very difficult to assess which often means you get declined. They are unable to evaluate how you would be as a creditor so you are either declined or given high interest on your credit agreement.

Payday Loans: Read about how payday loans can lead to rejected applications

Payday loans is a short term borrowing for people to get their hands on money very quickly. This can be to cover bills, pay for any emergencies and even top up your monthly pay. Interest rates are normally very high and paid back over a short term sometimes within weeks of the money being borrowed. This form of lending is quick and easy but has huge ramifications when looking to borrow for a mortgage. When mortgage lenders see this on your credit file they often refuse the application, especially if it’s within the last 6 to 12 months. Even though you credit file maybe a high score but you have a payday loan it will go against you. Mortgage companies like borrowers who can manage their income and expenditure and they like to see that applicants can manage without over spending and in some cases able to save from their disposable income. Having a payday loan proves borrowers are not capable of managing their money and over time would struggle with their mortgage payments.

Low credit score

This would be shown on your file for several reasons, you may have done one too many searches for credit which have a negative impact. You can be paying on time but taken a lot of credit agreements which indicate you have too much on credit. You have missed payments on your credit file hence the low score and last but not least, you have no credit which doesn’t show any history and could impact lenders decisions thus giving you a low score.


WHAT FACTORS TO CONSIDER WHEN APPLYING FOR A MORTGAGE?

Deposit

When considering a mortgage with bad credit, it’s important to note that lenders see you as a risk so a bigger deposit always helps your chances with getting a mortgage. Not to say a small deposit won’t get you the mortgage as it always depends on the severity of your credit file. Some specialist lenders would accept 5% deposit but is heavily dependent that the client has no major credit issues. Bankruptcy cases will always want a bigger deposit so it’s always good to check by asking Bad Credit Mortgage specialist your options.

Proof of income will always be requested when the application is submitted so you would need to make sure you have a bank statement showing the amount when applying for the mortgage. Any monies received as a gift from family must show a trail of the money and where it has come from. Proof of deposit will always be required by the Bad Credit Mortgage experts to satisfy money laundering regulations.

Below is a deposit table to illustrate the acceptable sources of deposit the lenders will accept, or will not accept and how they will require the evidence Your Mortgage.

Deposit Source What the Mortgage Lenders say Evidenced by
Own Savings / ISA / Life time ISA The majority of lenders accept this 3 Months savings or bank statements to show proof of money acclimated over time

ISA / investments – 12months statement
Family gift – Cash Will accept from family member. Parents, Siblings, in Laws, Grandparents, Auntie/ Uncle (related by blood) Niece / Nephew. Partners living with applicant could be married or Co-habiting. Also Step and half family members are accepted.

Lenders DO NOT accept gift from other sources such as cousins, friends, co-workers, these are not accepted due to money laundering rules and funds could be classed as loans that need to be paid back..
A letter from family member stating gift amount and state knowingly they do NOT want the gift to be repaid back or have any interest in the property
Gifted Equity Will accept ONLY from close family members only such as Parents , Siblings, Grandparents or Children A letter from family member stating gift amount and state knowingly they do NOT want the gift to be repaid back or have any interest in the property
Inheritance Will accept if the inheritance will be paid prior to full mortgage application or currently going through probate. Bank statement showing funds / solicitors confirmation
Sale of Assets Assets such as jewellery, cars and other valuable personal assets can be accepted by the lenders as proof of deposit. Although thorough checks and due diligence will be carried out by the lender, Mortgage Broker and Solicitors to see if no money laundering rules have been breached and funds are legitimate. Evidenced by recipe sale and proof of money deposit or money transaction on bank statement
Loan / Credit Cards /other unsecured credit Raising your deposit by taking out loans or credit cards are not accepted by most lenders. Very few accept this only if the loan or credit cards have been paid back in full. Student Loans are not acceptable Only if the loan / credit card is paid back in full (Subject to lenders direction) Student loans are not acceptable
From Foreign Sources Majority of lenders don’t accept this cause of money laundering rules. As the money can be difficult to trace to the original source. Under special circumstances lenders will need to verify the source and money trail to be accepted

Employment + Income

Income is always important as this will determine how much you can borrow. Most lenders work on a calculation of 4.5 x your annual salary being the total amount you can borrow, however there are lenders that sometimes 5 times your annual income. Bad Credit Mortgage specialist assign you to independent Advisors that have access to the whole of market, giving you a higher chance of finding a lender to borrow the maximum amount with your income.

Joint Applicants:

Jack and Rose are both in full time employment. Jack earns a basic salary of £21,500 a year and Rose Earns £35,000

£21,500 + £35,000 x 4.5 = £254,250

Jack and Rose Can Borrow up to the maximum of £254,250*

Other factors such as depandants, credit history and current active credit cards/ loans can decrease this maximum loan amount.

Net Profit Average over 2 years

2017/2018 Net Profit = £32,000

2018/2019 Net Profit = £35,000

£32,000 + £35,000 = £67,000 / 2 = £33,500 (2 Year Average)

£33,500 x 4.5 = £150,750 max borrowing

Outgoings

Since the credit crunch the outgoings has become even more important in detailing for mortgage lenders. Knowing what you’re monthly spend is and how much you can afford after costs is so imperative.

Age

Age can be a huge factor if you are looking for a mortgage and would like to the monthly payments affordable. Most lenders are now moving the age limit. Lenders are always changing their criteria and most lenders are working on age limit of 75 years old whilst there are one or two that work on higher age of 85 years old. In these circumstances lender will need to see pension income in retirement if you are looking to go beyond a certain age limit.

Type of Property

It is important to know the age and type of property as certain buildings within the UK in the 1950s to 90s were constructed with varying materials that lenders today frown upon. Steel Frame, concrete, pre fab, are just some of the construction types that lenders want to know more about. Any properties that are classed as NON STANDARD CONSTRUCTION must be confirmed so when researching Bad Credit Mortgage Brokers can match consultants who know lenders that would consider them. Ex council houses are also another property type lenders would like to know about, so making note of this is crucial if you feel your property falls into these categories.

Term of the Mortgage

The term of the mortgage is the length of time you take the mortgage out. It can be beneficial having a longer term on your mortgage to help reduce or making the monthly payments affordable. However spreading over a longer term will cost you more as essentially you are paying more interest to the lender. Bad Credit Mortgage expert believe that each time you remortgage, if you take a year or two off the mortgage term, it will help you reduce the time, but more importantly save you £1000s off your mortgage. So imagine you have a mortgage for 25yrs and after 2yrs you are looking to remortgage. Now most people would take out new mortgage with 23 year term. Bad Credit Mortgage will introduce specialists who will look at your affordability and see if they can give you a quote for 22yrs/21yrs to see how much you can save. Each time the brokers will provide a service that allows you to manage your mortgage better.


HOW CAN I GET A MORTGAGE WITH BAD CREDIT?

An easy and straightforward process to follow:

Access your credit report from one of the credit reference agencies

This is very important in finding out what issues you have and the dates of when they occurred. Experian or Equifax are good but Clear Score is free option and you are able to look at several credit agencies at once. Try not to complete multiple searches on your credit file as this will hinder your application

Fill in our Mortgage enquiry form

Our specialist brokers are independent and whole of market which gives you great advantage of getting the best deals on the mortgage market. More importantly our specialist brokers often get exclusive deals from lenders which is why you can be assured our brokers will find the right deal for you.

Let an Advisors do all the work – SIMPLE

The Specialist brokers will come back with a quote based on the information you have provided. Once you are happy and have understood the terms of the mortgage product the specialist brokers can move to the application stage.


WHAT DOCUMENTS & DETAILS ARE NEEDED FOR MY MORTGAGE APPLICATION?

bad-credit-document bad-credit-document bad-credit-document bad-credit-document bad-credit-document
bad-credit-document bad-credit-document bad-credit-document bad-credit-document bad-credit-document

Free, Quick & Easy, No credit check

  • Credit report:
This is very important if you have a history of adverse credit then Experian, Equifax, check my file or clear score will be needed so the bad credit mortgage brokers can assess your history to get the right mortgage for you.

  • Proof of ID
- A Valid passport or driving licence showing your full name and date of birth,
Non-European citizens must provide passport and residency card / visa. Visa must have another 2 years remaining. Non-European citizens also must have lived
In the UK for 3yrs or have indefinite leave to remain.

  • Proof of address
These documents must be dated in last 3 months: utility bill (gas electric, water bill, council tax, TV Licence, credit card statement and driving licence. It’s important to point out no lenders accept mobile phone bills.

  • 3 months
Recent Payslips or 12 weeks if paid weekly

  • Latest P60
(some lenders will require this)

  • SA302’S AND TAX YEAR OVERVIEW
(min 3 years or how long you have been trading)

  • Proof of deposit
(bank or ISA savings statement or gifted family deposit letter which our specialist brokers will provide the lenders template)

  • Latest personal 3 months bank statements:
for ALL active accounts, our specialist brokers will need to show the lenders your daily and weekly spending and your salary going into your account. So if you have two or more bank accounts please provide based on the above info
Bank statements Criteria- lenders now request all bank statements to meet the following criteria:
  1. A full 3 months – This must not have any pages missing and they require the statements to be from the 1st of the month to the end. So if up the application is on 01/04/2020, then back dated from 01/01/2020 to 31/03/2020.
  2. Identifiable to you or partner (if joint bank account) – must have your name(s), address, account number and bank name on statement.
  3. Online statements – must have identifiable information and ideally the web URL on the bottom. Bank prints – must have identifiable information and a branch stamp and signature, ideally on every page

  • Proof of rental Payments (if currently renting)
– 12 months bank statement show rent being paid or your current landlord reference letter.

  • 3 Months Business bank statements
– whilst the lenders does not always require this the more information our broker has they can speed up your application process.

  • 3 years Business Accounts
( Self Employed Applicants only, not all lenders will request)

  • Estate agent details:
name, address, email, contact number for valuation, again providing this to the broker will allow them to process your application efficiently.

  • New property details:
address, construction material, approximate year of build, detachment type, garage or number of parking spaces, number of bedrooms/bathrooms/kitchens/other rooms. The details can be very important when applying for a mortgage as for example there are certain restrictions with lenders accepting particular construction property types, certain flats in high rises, or floor space which means details such as these can affect the application process and so the more our specialist brokers know about the property the greater chances they have of getting the right lender and having your mortgage approved.

  • Solicitor details:
Name of solicitor, name of acting solicitor, email address , phone number With any mortgage transaction you will need a solicitor / conveyancer. They are the legal entity who help customers conduct searches on the property and comply with the instructions of the mortgage company when the offer is produced. They request the money from the lenders and distribute to the seller or mortgage lender depending on a purchase or remortgage application.


HOME BUYERS COSTS

When applying for your First mortgage, Re-mortgaging or Purchasing a Buy To Let Property, there will be costs involved. Below is a table of to illustrate the main upfront costs that we want to make you aware, so there are no surprises for you when applying for a mortgage. A specialist Broker will explain and make sure you are completely aware and happy of all the costs involved before applying for your mortgage.

STAMP DUTY

If your home is under £300,000 you don’t pay Stamp duty
Stamp duty rates are different in Wales and England.
Stamp Duty rates are also different for second home/additional property,
Such as if you want to buy a property to let out and become a landlord.

DEPOSIT

The amount of deposit you want to put down towards the mortgage.
This can be from your own savings or a gift from family member
With Help to Buy you can have just 5% deposit

The lenders will charge a valuation fee of around
£200 - £350 Depending on the house valuation.
The valuation fee will be explain and outlined on the mortgage quote
given to you by your specialist broker. ,

VALUATION FEE

SOLICITORS FEES

Between £995 - £2500 for residential purchase
To Buy to Let purchase. Ask your Bad Credit Broker for a referral.

HOME INSURANCE

A Lenders mandatory requirement when taking out a mortgage.
Your specialist mortgage broker can help you with you home insurance.


MAXIMUM LOAN WITH BAD CREDIT

Below Is a credit criteria of one of the lenders that our partners at Bad Credit Mortgage Brokers work with.

Maximum loan % (LTV) 90% 85% 80% 75% 70%
Defaults Number Allowed 0 in 36 months 1 (must be satisfied) in 36 Months 2 in 36 Month 3 in 36 Months 4 in 36 Months
Amount 0 in 36 Months If Less than £300 or telecom even in last 6 months - Ignored
Date 0 in last 6 months – Over 36 ignored – Will be classed as Clean Credit
CCJ County Court Judgement Number Allowed 0 in 36 months 0 in 36 months 1 settled In 36 months 2 settled In 36 months 3 settled In 36 months
Amount 0 in 36 months If Less than £300 or telecom even in last 6 months - Ignored
Date 0 in last 6 months – Over 36 ignored – Will be classed as Clean Credit
Missed Mortgage Payments

Missed Rent Payments
Number Allowed 0 in 36 months 0 in 13 -24 Months 2 in 13 -24 Months 3 in 13 -24 Months 4 in 13 -24 Months
Date 0 in 36 months 0 in 12 Months

If Balance above £500, most recent credit payment must have been made. Not acceptable if most recent 2 payments missed Ignore if current balance is below £300

Maximum of 2 missed payments allowed on each credit card / loans and other unsecured credit.

Must be due to a life event and conducted satisfactorily
Missed Credit Payments

Credit Cards / Loans
Period 0 in 36 months
Within Last 6 Months 0
Debt Management Plan / Debt arrangement schemes explanation Speak to an Advisor
Criteria Speak to an Advisor DMP – Can accept if still in operation and can remain

DAS – if active will not be accepted
Bankruptcy & IVA Discharge More than 6 years More than 6 years More than 3 years More than 3 years More than 3 years
Pay Day Loans Criteria 0 in last 12 months of date of Decision in Principle
Subject to credit score with some lenders

REPAYMENT OR INTEREST ONLY OPTIONS

When taking a mortgage for residential or Buy to Let purposes there are two payment options to choose from Repayment or Interest Only.

Repayment option is the most advised payment option for residential mortgages and has been since the credit crunch. For Buy to let Mortgages however Interest Only is the most common clients take out. Our fully comprehensive BUY TO LET MORTGAGE GUIDE will inform you of all the information you need to know about purchasing or remortgaging a Buy to let property.

  • Repayment Mortgage (Capital & Interest)
– When taking out this method of payment, you are paying the capital and interest on the mortgage. This will pay the mortgage at the end of the term. Paying off the capital and the interest is normally a lot more expensive and due to this customers would spread there payment over a very long term to make them affordable. These terms could rise to 25 years up to 40 years depending on the client’s eligibility.

  • Interest only
– This payment option only pays back the interest charged for the Loan you have borrowed. The amount owed will stay the same at the end of your particular deal or term. It is important to note the amount borrowed will always be the same on interest only and you would need to make sure how you will pay the loan at the end of the term. Customers take out this payment method because it is cheaper and affordable. Customers tend to go onto this type of payment for a number of years until their circumstances are a lot better and their disposable income is higher. However many lenders will only offer this option to residential customers if they have large a deposit or equity in their property. BTL Landlords tend to go for this option which again is explained in more detail in our BUY TO LET MORTGAGE GUIDE.


FIXED VS. TRACKER RATES

Fixed Rate – A fixed rate mortgage is when you payments are fixed for a certain period and your payment will not go up or down during this time. The payment option helps clients budget and manage their mortgage comfortably knowing what they have to pay each month without worrying about interest rate movements. A fixed rate mortgage is the most popular rate people go for when taking out a mortgage.

Tracker Rate – This rate tracks the Bank of England (B.O.E) base rate. Your interest payment is normally above the B.O.E rate. If the Bank of England decide to move the rates up or down your payments will go up or down with it. The Bank of England meet each month to discuss whether to move the interest rates up or down its important to note your payments will fluctuate each month depending on B.O.E movements.

Example – Bank of England Base rate 0.1% and the lender would offer a rate of 0.9% above base so your total interest rate is 1% a month


2 YEAR & 5 YEAR PRODUCTS – LEND MORE OVER 5 YEARS AND WHY?

When Bad Credit mortgage brokers introduce you to the experts they will find mortgage lenders who will initially offer deals which are between 2yrs to 5yrs. The mortgage companies offer these deals to keep you as a client for this particular duration. With these deals, lenders will offer lower rates with higher products costs or vice versa. However clients who choose a 5yr fixed have a little more flexibility from the lenders because you will be a client for a longer period. This will be in the form of lower costs or flexibility in borrowing more money.

It is important to point out whilst locked into these 2 year or 5 year deals, if you wanted to come out from the deals there would be a penalty. These can be quite costly but not to worry because Bad Credit Mortgage experts will prompt you with all the information so you can make an informed decision before choosing.


BAD CREDIT AND A FIRST TIME BUYER

We know that some first time buyer’s struggle getting on the property ladder and in the past you may have had some credit issues like missed payments on credit cards or loans. At Bad Credit Mortgage Brokers we will find you a First time Buyer expert, who can search the whole of market lenders and has extensive knowledge about their lending rules for bad credit clients. Refer to our comprehensive guide for FIRST TIME BUYERS, Our page details all the information you need to know and answers your questions about getting your first mortgage.


BAD CREDIT AND SELF EMPLOYED

Most mortgage application will be no different with Self-employed clients the only criteria that differs is proving your income through your self-assessment tax returns. Please see our SELF-EMPLOYED MORTGAGE GUIDE for further details but in simple terms YES we can do it. With the coronavirus pandemic lenders are being quite selective with the self-employed roles but this will change over time. Enquire with Bad Credit Mortgage Brokers as we can introduce you to a Self Employed expert broker who has the knowledge and understanding of lenders who can lend to self-employed clients with bad credit.


BAD CREDIT AND BUY TO LET

It’s important to point out that there are only a handful of companies who would consider clients who want to purchase a Buy to let property with bad credit. Refer to our BUY TO LET MORTGAGE GUIDE page, for all you need to know about getting a Buy to Let Property. You don’t have a huge choice when it comes to the BTL mortgages, as some mortgage lenders are inclined to lend to clients who’s looking to purchase Buy to Let properties with bad credit. Whilst there are BTL lenders who accept Bad Credit on BTL mortgage, Bad Credit Mortgage Brokers will introduce you to experts who have access to these specialist lenders.


BAD CREDIT REMORTGAGE

Many clients come into difficulties whilst having a mortgage and often like to remortgage to pay off their debts by remortgaging. Or just trying to get a better deal from their current lender who is not offering any favourable rates. Our Comprehensive REMORTGAGE GUIDE will give you all the help and guidance in finding the right lenders to remortgage.


MY MORTGAGE APPLICATION PROCESS

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Free, Quick & Easy, No credit check


TIPS TO IMPROVE YOUR CREDIT SCORE AND HISTORY

  • Check your credit score regularly
  • Register your home address on the electoral role
  • Use your credit and loans responsibly
  • Don’t apply to many credit searches in one month
  • Don’t miss repayments
  • Don’t keep unused credit cards
  • Don’t Over use your unarranged bank overdraft

PROTECTING MY HOME

Home insurance - Lenders require you must take this out prior to your mortgage completion. Home insurance is split into two categories, Buildings and Contents insurance.

The Buildings insurance covers the actual bricks and mortar of your property including fixtures and fittings, you’ll need to have buildings insurance in place before you exchange contracts.

The contents insurance covers your possessions in your home, in event of theft, loss or damage and including fires or floods, although content insurance is not a requirement by the mortgage lenders, but most people opt to add contents insurance as well.

Life insurance - Nobody knows what lies ahead of us or want to think the worst, but if the unthinkable happens and we take precautions. Life insurance is very important in protecting your loved ones and your home from unforeseen events. The life insurance will help pay for funeral costs, your mortgage and other needs.


SPEAK TO A BAD CREDIT MORTGAGE BROKER TODAY!

If you have bad credit and looking to purchase or remortgage your home or if you think you may have some credit issues that may affect your application.

There is no need to worry, you can speak to someone at Bad Credit Mortgage Brokers. It is very important that you get the correct advice and support when applying for a mortgage with bad credit.

A Bad Credit specialist advisors have whole of market knowledge and products that can help you find the right mortgage, saving you the time and money.

Free, Quick & Easy, No credit check


FCA disclaimer

The information written is a relevant and comprehensive guide for visitors to read about the mortgage industry. The information collated is based on current mortgage lending criteria and polices. We endeavour to keep the website up to date but the information may vary from time to time as lenders change their criteria based on evolving financial climate. Please be aware the information and guidance written is not specific to an individual and does not constitute advice or guarantee a mortgage. The industry experts we introduce are qualifiedto give mortgage advice and are regulated by Financial Conduct Authority. All advice given by the advisors will be based on your specific requirements and circumstances.Your Home may be repossessed if you do not keep up repayments on your mortgage. Thinkcarefully before you secure any debts against your property. The Financial Conduct Authority does not regulate some forms of buy to let mortgages.