The Sun seeking mortgage broker advice

ended 13. August 2021

A journalist at The Sun is looking for experts to give tips on how to get a mortgage even if you have a bad credit score:

  • Are there any mortgage providers offering deals that are more suited to people with poor credit scores? Which ones?
  • How does a bad credit score impact your ability to get a mortgage?
  • How can you improve your credit score?

Go go go. Keep your alert_responses really short and sweet. An essay is DELETE! (I'm a poet and I don't know it.)

8 responses from the Newspage community

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"There are more lenders offering mortgages for borrowers with bad credit than you might think. Specialist lenders offer bespoke deals for people with credit issues, but there are also high street banks and building societies who can consider these customers under the right circumstances. "Having bad credit does mean that you're likely to find it harder to get approved for a mortgage, though, purely because there will be fewer lenders to approach. There's also a greater chance that you will be offered a higher interest rate or be asked to put down a larger deposit to offset the risk the lender is taking on. "Your chances of approval will likely come down to how old the credit issue is - the older, the better. Some lenders will also take into account the severity of the problem as well as the reason for it. For example, a bankrputcy that was the result of financial mismanagement would be a far bigger deal than a default that arose because of an unexpected life event. "To boost your chances of approval, there are ways you can build and repair your credit ahead of a mortgage application. Reviewing your credit reports yourself so you can challenge any inaccuracies and have outdated information removed would be a good start. "You could also consider settling any debts you're in a position to clear, join the electoral register and avoid too many hard credit searches from lenders in a short space of time." If a low credit score is the problem, one option would be to take out a credit card, spent a little on it and clear the balance in full each month. This will help you build up some good credit history, as long as you keep up with your repayments. Finally, speaking to a mortgage broker before you apply can help you get a mortgage with bad credit. There are brokers who specialise in securing mortgages for people with all kinds of credit problems. They have deep working relationships with the right lenders and can offer bespoke advice to people who have struggle to get onto the property ladder because of their credit history.
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"Before all other lenders, try Halifax. They are one of the most flexible high street banks that consider offering mortgages to individuals with a poor credit score. If they cannot help, it's probably best to go to a good broker as the market can become more complex."
"There are plenty of lenders helping people with less than pristine credit scores. Lenders like Kensington, Precise, Aldermore through to the likes of Together who are incredibly forgiving but who can be fairly pricey. "That being said though, very often we can get cases with minor adverse credit such as a one-off CCJ for a parking ticket through even with some of the high street lenders at normal prices if it's not too bad and a proper business case is made for the business. A one off blip is not the end of the world! "The main thing though is that regardless of how good or bad your score, always go and see a broker - they do tricky mortgages for a living and will ensure that they recommend the best possible deal for you and your own circumstances."
"There are many specialist lenders such as Kensington, Bluestone & Pepper who lend to clients who may have had a blip or poor credit score and many more including household names such as Halifax, TSB and Natwest who can consider lending to clients who have a poor credit score. It’s all down to what exactly is causing the poor credit score. "A bad credit score can impact the amount of deposit you require to purchase a property but in some extreme cases such as having an active IVA (Individual voluntary arrangements) or DMP (Debt Management Plan), it could pretty much limit or pretty much remove any or all lenders on the market hence why it’s so important to speak to an advisor at the start of the process to put a plan in place. "The simplest method to improve your credit score is to ensure you are on the electoral roll and ensure you pay everything on time and do not have credit agreements which you don’t actually need."
"If you have bad credit the main thing is to make sure you pay back as much of the debt as you can, and then talk to a good broker who knows what they're doing. "Your credit score is not the main driver, rather lenders are bothered about credit conduct and the type of bad credit you have, the amount and the recency. The worst is any type of insolvency such as bankruptcy and IVA's and the least worst is a few missed payments. "For example, a £10,000 unsatisfied default that was registered yesterday will be treated differently from a £180 CCJ that has been satisfied for over 3 years. "The majority of bad credit mortgage lenders only tend to operate via brokers but as a guide some of the better specialist lenders are Kensington mortgages, Pepper Money, Precise Mortgages and Bluestone but there are many more. "People should try to forget about credit scores as lenders have far more sophisticated and complex systems to determine your mortgage eligibility than a simple number from a credit reference agency. "The best ways to improve credit score and prove you're a better bet to get a mortgage are to make sure you're registered on the electoral roll, pay off any bad debt you can, make sure all your documents and bank accounts are registered to your current address along with your driving licence, and try to keep your debt to income ratio below 50%, which means if you earn £30,000 per year don't have more than £15,000 in unsecured debt."
"Getting a mortgage isn't as difficult as people think. Preperation is key when going for a mortgage, with many lenders offering specific products for credit-impaired customers, and some lenders being more specific to those who have struggled. "A poor credit score doesn't neccesarily stop you getting a mortgage but it does limit the lenders available to you. Exactly how bad your credit is will determine what lenders you can go to. "Recently we have arranged mortgages for those with CCJ's defaults, missed payments and even IVA's, but expect to pay more: deposits are usually upwards of 25% and interest rates are also usually higher. "To improve your score you need to look after it, speak to a broker and get a copy of your Experian or Equifax report. Here are a few tips: Get on the electoral role Manage your payments and make sure you budget not to miss any Keep your balances low, ideally below 50% Check for errors, if you see one notify the credit reference agencies Minimise hard searches and try not to take out new credit often "Keep this going and your score should improve in no time."
"Historically Halifax were the 'go-to' lender where there was a history of missed payments on personal debt. However recent changes over the past few years mean this is no longer the case, especially for those with a 5-15% deposit. "Every high street lender reacts differently when there is a history of impaired credit or a low credit score. Lenders such as Barclays are great with missed payments even with a low deposit, while some lenders such as Coventry are happy to consider defaults and CCJs under a certain value depending on when they were registered. Other lenders however will automatically decline you if you have a default or CCJ showing on your credit file. "Receiving specialist advice is crucial as too many advisers go straight to the specialist lenders such as Precise, Kensington and Pepper Home Loans the moment you mention missed payments or something more serious on your credit file, when it's often the case that you could qualify with the right high street bank and pay half the rate of interest. "Just because you may have been declined by one high street bank, it absolutely does not mean you will not qualify with another, and this is where receiving the right advice is vital."
Every lender has a different process when it comes to what they will accept. Many mainstream lenders are ok with a singular late payment, if it was more than 6 months ago and depending on what the late payment was for but if there are more significant credit issues then you may need to use sub prime lenders, with more expensive deals available. The worse the credit the more expensive the deal is likely to be and some lenders have rates as high as 7% to take on those applicants with more noteable credit issues. In some cases it may not be possible to obtain a mortgage at all and you may have to show a longer track record of good account conduct before applying.