Poor credit mortgages explained

Updated 28th September 2020

Poor credit mortgages explained

Also known as subprime or bad credit mortgages. The term poor credit covers a wide range of different things. In this article I am going to explain each of the different types of poor credit and how this affects getting a poor credit mortgage.

The key to any mortgage application, and especially poor or bad credit mortgages is to have all the information at hand before approaching any mortgage lenders. The mortgage experts will ask for a copy of your credit report and from this they will be able to advise you on the best way forward. Click here to access your credit report.

For an no obligation chat call us on 0300 124 5655 or complete our quick enquiry form.

Can I get a poor credit mortgage with defaults?

A default is a negative payment marker that arises as a result of unpaid arrears on your credit file. When a default is issued it usually means that the lender no longer sees the borrower as a customer, but instead sees them as a debtor.

It is possible to get a mortgage with defaults; this will come down to the following factors.

  • Date of default
  • Default amount
  • Type of account
  • Default satisfied or not
  • Total amount of defaults

Can I get a poor credit mortgage with CCJ’s?

CCJ stands for ‘County Court Judgement’, which is a type of court order directing someone to repay an outstanding debt. Lenders can get one against you if any of your accounts go into default. It’s their way of getting you to pay. A County Court Judgement will stay on your credit report for six years from date of registration.

It is possible to get a mortgage with a County Court Judgement, this will come down to the following factors.

  • Date of County Court Judgement
  • County Court Judgement amount
  • County Court Judgement satisfied or not

We have seen a growing trend over the last few years of clients getting a County Court Judgement for a parking fine, which in turn affects credit score and lender options. Our mortgage experts will be able to advise you on the best solution for your circumstances.

Can I get a mortgage after bankruptcy?

Bankruptcy is a legal status for people who’re unable to repay the money they owe. You can only be made bankrupt if you have debts over £5,000, and it’s generally seen as a last resort. You can be made bankrupt by a creditor or you can choose to do this yourself via the courts.

It is possible to get a mortgage with a bankruptcy; this will come down to the following factors.

  • Date of bankruptcy registration
  • Date of bankruptcy satisfaction
  • Reason for bankruptcy
  • Credit profile since the bankruptcy

Even if the bankruptcy isn’t showing on your credit report you must always disclose this to your mortgage expert, the solicitors perform a bankruptcy check as part of their due diligence, if this is then outside lenders criteria the whole process will fall down at the very last stage.

Can I get a poor credit mortgage after a repossession?

Repossession is the term used when a financial or lending institution repossesses or ‘takes’ the item which was offered as Security on a secured loan in the event of payments entering default. When this involves repossessing a house this is truly the option of last resort, and most lenders will try and avoid this option.

It is possible to get a mortgage after a repossession; this will come down to the following factors.

  • Date of repossession
  • Any outstanding monies owed to the previous mortgage company.
  • Reason for repossession
  • Credit profile since the repossession

Some lenders will not lend to anyone who has ever had a property repossessed, so always declare this to your mortgage expert form the outset. Our experts will then be able to advise you on the correct lender for your circumstances.

Can I get a mortgage whilst in a debt management plan (DMP)?

A debt management plan is an agreement that can be made between you and your creditors (companies you owe money to) if you’re unable to make payments on time. It allows you to pay a smaller amount each month than originally agreed. You’ll still have to pay off all your debt, but you can do it more slowly.

It is possible to get a mortgage with a debt management plan; this will come down to the following factors.

  • Date debt management plan started.
  • Conduct history – payments made on time.
  • If discharged – date of discharge.
  • Reason for entering debt management plan.
  • If debt management plan is to remain in place with the new mortgage

Some client will want to remortgage and pay of the debt management plan, some will want to keep the debt management plan in place with the new mortgage. Ideally you will need to show 12 months of good payment conduct within the debt management plan.

Can I get a mortgage after a debt relief order (DRO)?

A debt relief order (DRO) is a way to clear your debts. It’s usually suitable for people with a relatively low level of debt, and relatively few assets (i.e. belongings of value, such as a car or house). A  debt relief order may be a cheaper and simpler alternative to bankruptcy. Mortgage lenders will look at this in the same way as a bankruptcy.

It is possible to get a mortgage with a debt relief order; this will come down to the following factors.

  • Date of debt relief order registration
  • Date of debt relief order satisfaction
  • Reason for debt relief order
  • Credit profile since the debt relief order

This is seen by many as a mini bankruptcy, but most lenders will have the same criteria in place as a bankruptcy

Can I get a mortgage after an Individual Voluntary Agreement (IVA)?

An Individual Voluntary Arrangement (IVA) is a formal and legally binding agreement between you and your creditors to pay back your debts over a period of time. An IVA must be set up by an insolvency practitioner.

It is possible to get a mortgage after an IVA; this will come down to the following factors.

  • Date IVA was registered
  • Date IVA was discharged
  • Credit profile since IVA

Currently an IVA must be satisfied before you will be able to obtain a mortgage, the length of time for satisfaction varies from lender to lender.

Speak to a poor credit mortgage advisor.

There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or can’t borrow what they need – just because one lender has declined you, don’t give up.

Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.

The expert brokers we work with have experience in dealing with all aspects of bad credit mortgages and importantly using the whole of the market to access the very best deals available.

To find out how we can help call us on 0300 124 5655 or complete our quick enquiry form to speak to a mortgage expert.

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