Tips on how to get a bad credit mortgage by Mortgage Experts Online.

Updated 28th September 2020

Tips on how to get a bad credit mortgage by Mortgage Experts Online.

If you are looking to obtain a bad credit mortgage , either now or in the future, it is never too early to start planning. There are some simple steps that you can take which will increase your chances – here are our top 5 tips to increase your chances of being accepted for a mortgage.

Make sure you’re on the electoral roll.

Lenders use electoral roll information contained within your credit report when confirming who you are (through electronic identification), where you live, as well as your credit worthiness.

While a lot of the adverse lenders would look to obtain evidence of previous residency through historic bank statements or utility bills, most high street lenders would simply deduct points on their internal score which could ultimately end up with you being declined.

You can click here on help getting on the electoral role

Obtain a copy of your credit report.

Many clients have lived in rented accommodation previously, having their names on utilities bills, as well as having bank accounts, credit agreements, and cars registered at these addresses.

Many issues arise on mortgage application due to previous utilities bills not being fully settled, or even parking fines being sent to previous rental addresses – these can be minor issues such as a few missed payments being registered all the way to county court judgements (CCJ) being issued in your absence.

It is always prudent to check your credit report prior to applying for a mortgage.

To access your credit report click here

Pay bills on time and in full.

Paying your bills on time and in full will massively increase your chances of obtaining a mortgage, as well as ensuring that you have no returned direct debits showing on your bank statements. If the timing of direct debits is just before payday and you are concerned about direct debits being returned – speak to the providers to see if the collection dates can be altered. Time and again we see cases pass credit score, only to receive bank statements which show returned payments.

If a lender sees that you are struggling to pay your £40 Virgin Media bill month on month, how much confidence will they have in lending you £100,000 for a house purchase?

It is also worth mentioning overdraft limits – do not exceed these without prior agreement from your bank!

Existing credit

Many people have credit cards that they took out many moons ago, and may no longer use – is it worth cancelling these?

It is foolish to get rid of all of your unused credit, as lenders will look at not only debt to income ratios for unsecured debt, but also percentage of credit being utilised. By cancelling a credit card with a £5,000 limit that is not being used, you could see your percentage of credit being used rocket – you could also see your credit score decline in the immediate term.

We see many posts suggesting that you cancel unused credit, however this is not always the best option.

Speak to a bad credit mortgage advisor

Even if you are not planning to purchase straight away it is always worth speaking to a mortgage broker, particularly when dealing with issues like debt management plans (DMP), county court judgements (CCJ), and defaults.

You may believe that clearing these as soon as possible is the best course of action, however depending on the recency, value registered and what kind of accounts these relate to, particularly with defaults, it may be more prudent to put this money towards your deposit – or even clear other credit commitments to help with lender affordability.

Speaking to a bad credit mortgage broker early in the process will ensure you are moving in the right direction. The brokers we work with are more than happy to guide you in the right direction, as they are focused on building client relationships – if a broker is not willing to give you some of their time to guide you in the right direction, do they really have your best interest at heart?

Call us now to discuss your options on 0300 124 5655 or complete our enquiry form to be put in touch with the best advisor for your circumstances.

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