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Mortgages for people who have poor credit history

Looking for a mortgage if you have had an issue with credit history in the past can be problematic and it is usually better to speak to an expert like iam mortgages. Our team of highly skilled and qualified mortgage experts will search the UK’s top mainstream and non-standard lenders to find you the lowest rate for your circumstances.

Even if you have been declined a mortgage in the past due to poor credit then you should speak to our advisors to see what we can do to help you. Mortgage rates for people who have a poor credit history can be a lot lower than you might think so speak to iam mortgages to see how much you should be paying.

iam mortgages Guide to Poor Credit Mortgages

There are a number of potential credit issues that can cause problems with some lenders due to what is known as ‘lending criteria’ which can include: Missed payments (e.g. credit cards, loans, mortgage payments etc.), Debt Management (e.g. IVA’s and Defaults), County Court Judgements (CCJ’s) and even Bankruptcy.

All of these credit issues can have an impact on your ability to obtain a mortgage with poor credit which can affect your mortgage rates and your mortgage borrowing. Due to the potential risks for lenders there are less finance institutions who will be prepared to offer a mortgage to someone who has had credit issues in the past, depending on the level of poor credit.

Why does poor credit make it more difficult to get a mortgage?

Previously there used to be a section of the mortgage market specifically for people who have credit problems which was called sub-prime or adverse credit mortgages. In the financial crash of 2007 there were a number of these institutions that were blamed for having caused the recession due to poor and irresponsible lending practices.

Following the financial crash in 2007 there has been very little or practically no lending available for people looking for sub-prime mortgages, until recently where lending criteria has relaxed. In the past several years since around 2015 there have been a number of lenders who have launched products specifically for people looking for poor credit mortgages and there are now even some lenders who now specialise in poor credit mortgages.

What is poor credit when applying for a mortgage?

There are obviously different levels of poor credit when it comes to applying for mortgages which have different levels of impact on your ability be accepted at certain rates. Some of the main issues when it comes to poor credit mortgages are:

Missed payments (credit cards and loans): Often a single missed payment on a credit card or a loan will have little or no impact on your mortgage application with most lenders. If you have had multiple missed payments on a single credit card or loan account in the past 12 or 24 months then you may find that this could have an impact on your mortgage rates.

Defaults: Some financial institutions will place your account in default if there are several issues with payment history or if there is a question around making payments. Often this will show on your credit file and a lender will often question this and it can make it more difficult to obtain a mortgage.

County Court Judgements (CCJ’s) and Individual Voluntary Arrangements (IVA’s): If you have had an issue previously which has gone resulted in a CCJ or an IVA then a lender will usually want to find out why this happened and some may not be prepared to lend.

Missed Mortgage payments: Generally the majority of mortgage lenders will want to know what happened if you have missed payments on your mortgage over the past 12 or 24 months, especially if there are multiple missed payments.

Bankruptcy: Often if you have been declared Bankrupt in the past several years then this will appear on your credit file and most lenders will either refuse to lend or require further information to be assessed by underwriters. There are at least a handful of lenders who will be prepared to lend so it is definitely worth speaking to one of our iam mortgages experts.

How can I make it easier to get a mortgage with poor credit?

If you have had a history of poor credit then there are a number of things that you can do to improve your chances of being able to get a mortgage either now or in the future. Some of the main ways that you can improve your chances of being able to get a mortgage with poor credit or reduce your mortgage rates.

Increase your deposit amount or buy a cheaper property: The amount of money you want to borrow compared to how much your property is worth is called Loan to Value (LTV). Generally the lower your LTV is then the lower the risk is for the lender which means that rates are lower and also lending criteria is more relaxed.

Improve your credit score: Often where you have had poor credit history then it may be possible to improve your score by showing a period of good credit. This can be simply by making sure that you pay all of your credit commitments over a period of 12 or 24 months which can show favourably on your credit file.

Settle any outstanding adverse credit: You may be able to settle any outstanding poor credit such as IVA’s or CCJ’s which can show on your credit file as settled which can help you to obtain a mortgage.

Speak to a poor credit mortgage expert: It is often the case that most high street or mainstream lenders will have a more restrictive lending criteria for poor credit mortgages. If you have already applied to a high street bank or building society or if you are thinking of doing this then you should speak to a poor credit mortgage expert such as iam mortgages.

If you need more help or want to speak to our team of fully qualified poor credit mortgage experts then you should complete our enquiry form or call 0800 009 6559 today.

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