Obtaining a mortgage if you have bad credit history

Bad credit history tips

how to proceed

how to proceed?

Problems on your credit file whatever their nature, greatly reduce your chances of obtaining a mortgage in the current market.

As a result, if you need a mortgage and you do have a history late payments, defaults, ccj’s, or worse, you need to approach the problem in the right way in order to increase your chances of success.

To help you, here is our list of do’s and don’ts when seeking a bad credit mortgage

Do – expect to put down a larger deposit

If you are moving home expect to put down a minimum 15% of your purchase price – as a first time buyer increase this to 20%.

We often get mortgage enquiries from applicants with 10% deposit. These enquiries cannot be placed in the current mortgage market unless you have an excellent credit record.

Don’t – go direct to Lenders

Lenders who accept mortgage applications direct from the public are interested in clean credit applicants only. Going direct will lead to a rejection, and put a credit search on your file. This will make your situation worse.

You may have heard of people with credit problems who have been accepted by the main banks but this happens only where there is an extremely minor issue on the credit file – this is a 1:100 chance even in those cases.

The major banks do not have enough funds to lend to those with clean credit records and just aren’t interested in adverse credit business.

Do – use a specialist independent mortgage broker

Only independent mortgage brokers that specialise in poor credit have the relationships with the lenders who will consider your case. Only they have the knowledge and experience to stand a realistic chance of assisting you.

We make a point here about ‘specialist’ mortgage brokers. You need to be working with a mortgage broker who deals every day with poor credit mortgage applications. You are unlikely to find this kind of specialist on your local high street or working in an estate agent’s office.

A business based on your high street is looking for mainstream applications only and will not have the experience and contacts you need.

Don’t – imagine that you do not have a problem

Stage one is to accept that yours is a difficult case and your objective is to find a source of lending. You are not in a position to pick and choose.

You should:

  • Expect to be asked for an up to date copy of your credit report
  • Be able to prove your income
  • Expect to pay a marginally higher interest rate than the levels you see listed on the comparison websites
  • Expect to pay for the advice you need
  • Expect to have to be patient during the application process

Sourcing a mortgage for the bad credit applicant can take several working days

Obtain a copy of your credit report

A specialist independent mortgage broker will ask you to provide them with a copy of your credit report. If a broker is working on your case without referring to an up to date copy of your credit report, stop using them immediately.

A broker cannot help you effectively without fully understanding your issues and this approach will cause you further problems.

Getting your credit report to your broker

Do not email your credit report to your mortgage broker (this is one piece of data you do not want to go astray). A good broker should have a system to enable you to upload your report online safely and securely. If you cannot provide your report to your broker safely in an electronic format, use recorded delivery post.

Further information

Obtaining your credit report
Secure upload link to A Mortgage Now

Do – be 100% honest with your broker

Your broker needs the best understanding of your situation possible. Mention anything that you believe could be important.

Don’t – look for a free solution to your problem

There isn’t one

Do – contact us now

request mortgage help

For advice before you apply please call us on 020 8979 9684

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