Bad Credit Mortgage Lenders and Rates

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Bad Credit Mortgage Lenders and Rates

What is a bad credit mortgage lender?

This is a mortgage lender who has a more flexible approach when having a client who has bad credit registered against them such as missed payments, defaults, county court judgements (CCJ), mortgage arrears, debt management plans, bankruptcy or Individual Voluntary arrangements.

Most High Street lenders require you to have a good credit profile along with a good credit score and unfortunately, many clients fail to pass these criteria, however, adverse credit mortgage lenders who offer their mortgages through brokers, such as The Money Hub, are able to help these clients.

What lenders offer bad credit mortgages?

As of writing this in Oct 2020, these are the main bad credit mortgage lenders who offer specialist mortgages to clients:

  • Aldermore Bank
  • Bluestone Mortgages
  • Masthaven Bank
  • Norton Home Loans
  • Pepper Money
  • Precise Mortgages
  • Together Money
  • Vida Homeloans

Some building societies don’t have a credit score level that you have to pass and they may allow an element of bad credit on clients profiles – typically they require any bad credit to have taken place over 3 years ago and needs to be satisfied at least a year ago.

Using a Specialist Bad Credit Mortgage Broker who has a lot of experience in this area is important as a mortgage is likely to be one of the biggest financial commitments that you take out, so you need to get the right advice from the start.

What are bad credit mortgage rates?

The rate offered can vary from client to client due to the level of bad credit that you have registered. The key factors in determining what bad credit mortgage rate you will be offered is:

  • Date – When did the bad credit take place? The more historic the date the more options you will likely have
  • Type of Credit – Did you miss payments on a loan or was it a mobile phone contract – This does have an impact as some lenders may ignore missed payments on mobile phone contracts.
  • Debt Balance – Was the bad credit on a large commitment such as car finance or was the missed payments on a small mail order balance for example.
  • Current Status – Have you managed to resolve the debt issue or does it still remain outstanding.
  • Equity – If you are buying a property the bigger the deposit you can put down the more options you will likely have, however if you have only a small deposit and quite a lot of bad credit registered you may struggle to find a lender.

What deposit will I need to put down to get a Bad Credit Mortgage?

This depends upon the factors mentioned above. The general rule is the more recent bad credit you have registered you will be required to put down a bigger deposit and the rate will be higher when compared to someone who had bad credit registered say 4 years ago.

Lenders criteria can be very detailed and often clients believe mortgage companies wouldn’t offer them a mortgage, however clients are surprised that these specialist bad credit lenders can help.

Why would someone have a low credit score?

You could be in a position where you have a low credit score, but no bad credit registered against you, so why is your credit score low? These are the main reasons that cause a low credit score:

  • No Active Credit – If you have no active credit, you have no record of being able to manage credit.
  • High Debt Level – If you have lots of debt and these debts are close to their credit limits, this implies that you are reliant on the debt to maintain your lifestyle.
  • Payment History – If you have missed payments on current debt or previous debt this will reduce your credit score. The more recent these missed payments the bigger the impact on your score.
  • Credit Searches – To take out credit you will need to have a credit check done against you, however you don’t want too many searches done as this implies you are trying to borrow money from multiple sources.
  • Voters Roll – By showing on the voters roll it helps lenders confirm your name and address history.

As a guide the credit score ranges are:

Credit Agency Very Poor Fair Good Very Good Exceptional
Experian 300 – 579 580 – 669 670 – 739 740 – 799 800 – 850
Credit Agency Very Poor Fair Good Very Good Exceptional
Equifax 0 – 279 280 – 379 380 – 419 420 – 465 466 – 700

Is there a best mortgage lender for bad credit?

There is no ‘best’ bad credit mortgage lender. There are lots of lenders that work in this area and the most suitable lender will be based on your current circumstances and your requirements going forward.

Speaking to a qualified mortgage adviser who has lots of experience in working with adverse mortgage lenders is a good place to start.

How to get a bad credit mortgage lender and find out what rates are available?

The experienced mortgage advisers at The Money Hub would be happy to help you. You can get in touch with us by completing the above enquiry form or call us directly. Please have a credit report ready as we would need this to ascertain what your mortgage options would be.

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Bad Credit Mortgage Lender FAQ’s

There are many bad credit mortgage lenders available, however to access these you will generally need to go through a mortgage broker, such as The Money Hub.

This could range between 15% to 40% all depending upon the level of bad credit that you have registered against you. You should get a copy of your credit report and speak to a mortgage broker, such as The Money Hub, for advice and confirm your options.

The main credit agencies are Experian and Equifax. You should get a copy of your credit report from them and then get in touch with specialist mortgage brokers to confirm what mortgage options you have available.

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