Adverse Credit Mortgage – What You Need to Know 

Applying for a mortgage for the first time is one that can be a very new experience. We’re not taught about it in the classroom, that’s for sure. Navigating a mortgage process can be somewhat challenging if you have no idea where to start. There are some individuals who will apply for a mortgage with an adverse credit history. So it’s important to know how best to work around this to be successful in gaining a mortgage.

What Is Adverse Credit?

Adverse credit is having a track record of a poor repayment history. Whenever you’ve taken out a loan or credit card and failed to make repayments, it will look bad on your credit history. This all gets reflected in your consumer’s credit report. This will lower your credit score and will also make it more difficult to then borrow money.

We are not debt advisors or councillors, but if you are seeking advice on managing existing debts specialist assistance is available e.g. the charity Step Change or Citizens Advice. 

By not paying these loans on time, you risk yourself getting into more debt. Especially if you find you’re one to borrow money and struggle to pay it back on time. But, you can improve your adverse credit with better financial habits going forward.

What Is An Adverse Credit Mortgage?

If you have adverse credit, it limits your options. This can be the case when you’re trying to get a mortgage. Yet, it doesn’t make it impossible to get a mortgage with an adverse credit history. Some lenders don’t always focus their attention on credit score declines. Nor do they look at the amount of missed payments you’ve made.

To get the right mortgage for you, it’s important to package your application in the correct way. You will only get the one opportunity, so you have to make it count.

Will Anyone Lend To Me With A Bad Credit Score?

Not every lender is going to lend money to you, but there will be some available. The pool of lenders might be smaller, and you may pay back higher interest rates. It’s still possible though.

To get a mortgage with a bad credit score, you need to show yourself in the best light when they come to review your application. The changes you make to help improve your appeal to the lender will help. Even if you’re doing it all last-minute. That willingness to improve is something that’s noticed by some lenders. So try to make the changes necessary to secure a mortgage.

How Do I Improve My Credit Score?

Improving your credit score is possible. That’s both before you start thinking about applying and during the process itself. You want to make sure you have a good credit score before applying. But making these changes at any point will also help.

• Get organised with all your existing regular payments like the credit card or your gas bill. Pay everything on time and set reminders in your calendar to help you remember.
• Review your spendings and try to reduce them to pay off any outstanding debts. Do this as soon as possible.
• Look at your credit report to make sure all the information you have on there is accurate and updated.
• Only go for property prices you can afford to buy. It’s better to do this instead of borrowing too much money. The lender should also advise you on what’s best for your financial situation. After all, they want to make sure you’re going to pay it all back.
• Try to avoid taking out too many loans and financial plans where possible. Opt for 2-3 so that you keep on top of it all. Consolidating your debt can also be handy to do to manage it.
• Limit yourself to one credit card. Credit cards can end up being the issue, especially if you’ve not used one before. Remember credit cards aren’t free money. You have to pay it back eventually and any missed repayments will land you in hot water.

First Time Buyers/Remortgage – Will The Process Be Different?

For remortgaging, you want to ensure that you’ve been paying your mortgage repayments on time. This will put you in a good position to get a remortgage, even if you do have a bit of adverse credit history in your report. 

For first-time buyers, you’ve not got a history of getting a mortgage. So the process is going to differ between the two. For both, you’ll have the option of picking the lender. Whether you choose to stick with the one you’re with as a homeowner already, or to go with someone different. With remortgaging, there are factors to consider when it comes to adverse credit. This includes how much of your property you’ve paid up and the amount you pay off each month.

First-time buyers will need to secure a mortgage in principle before looking. Gaining a mortgage might be easier too if you’re able to take part in any of the current home buying schemes. It’s worth exploring all your options either way. You want a mortgage that you can pay back without too much trouble.

Having an adverse credit history isn’t the end of the world. And it is still possible to get a mortgage with a bad credit score. Assess your options by looking at your current score. Working with a Mortgage Broker helps to identify lenders who specialise in adverse credit mortgages, reducing the time you need to research, they are also experts in giving you advice to clean up your credit file and present your mortgage application in the best light. 

Make sure you do your best to make yourself look as good in your application as possible. Take this also as an opportunity to try and become more financially stable with your money. Securing a mortgage is important, so do what you can to make yourself appealing to lenders.

Take this advice on board when buying your first home or remortgaging your current property. It’s important to try and avoid having adverse credit history but getting a mortgage is still doable.

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.