Anyone having a low credit rating or complicated credit history may think other product chance of ever obtaining a mortgage – but that’s certainly not the situation.
Bad credit mortgages are presently on the rise – meaning there’s a growing amount of specialist options tailored to people with marks on their own credit history.
But that’s not your only option, as some high-street lenders may also consider taking yourself on.
Which? asked the largest high street lenders, plus more specialist lenders, what their coverage is on giving mortgages to people with a bad credit score histories so that you can obtain a clear idea of those that will help you if you’ve were built with a few blips in your credit score.
Why might I want a bad credit mortgage?
Bad credit mortgages are products for those who have credit history with a less-than-perfect history of taking out and repaying loans.
Factors that literally brings down your credit score and imply that some lenders won't consider you for a standard mortgage include:
If you have any of these marks in your credit rating, don't give up hope of having a home loan – more providers than you believe can always consider lending to you.
Last month, we reported that the number of poor credit mortgages is booming, which could be good news for individuals who find it difficult to find mortgages on the high street.
But the downside is these products usually have far higher interest rates, as lenders charge more to people they deem a higher risk of not paying back their loan.
Should I obtain a poor credit mortgage?
If you have a a bad credit score history, you've got a choice of trying to get a specialist bad credit mortgage, which will possess a higher rate of interest, or enhancing your borrowing behaviour and repairing your credit score in order to be accepted with a high street lender which usually charges lower interest levels.
Your decision will depend on your own personal circumstances – but we've directly asked almost a dozen biggest high street and specialist lenders what their coverage is on the most typical blips in people's credit histories, to provide you with a concept of how long you will need to wait to use, and what your options are.
As an over-all rule, default payments is often regarded as long as a while has elapsed given that they happened, anywhere between three months to three years.
The likes of bankruptcies and IVAs are less commonly accepted – if they're, you’ll often have to hold back a bit longer of time prior to making an application. Lenders cited 3 to 6 years.
As you may expect, more specialist poor credit mortgage lenders would consider applications with a few form of marks on your credit rating. Precise Mortgages, for example, would consider those with defaults and CCJs just 3 months after they happened.
However, larger high street lender Coventry Building Society said it would also consider someone with default payments from three months afterwards – so, regardless of your needs, it’s still always worth looking around.
Lenders appear, however, to become more willing to lend to someone having a a bad credit score history than someone having a ‘thin’ credit file. While these folks might have never been in debt or missed any payments, the lack of any borrowing behaviour provides you with an undesirable credit score and makes you an unknown entity to mortgage lenders.
Note that applying following the allotted amount of time a lender has suggested won't guarantee your mortgage application being accepted – it is simply a guideline for what they’d look for before you decide to might be considered.
All lenders stressed that applications are considered with an individual basis, and can depend on circumstances such as your employment, how much you want to borrow, and how complicated your credit report is.
Which? visited 19 major high street lenders and more specialist mortgage brokers, and just 10 were ready to share their specific bad credit mortgage policies.
Bad credit mortgage lenders application criteria
Below, we show how 10 major mortgage brokers approach applicants with poor credit.
Coventry Building Society
Royal Bank of Scotland
The Cambridge Building Society
Yorkshire Building Society
How to enhance your odds of obtaining a mortgage
Letting time pass and keeping out of debt isn't the only way of reversing your credit damage and chances of getting a mortgage.