"Help! I've got poor credit and I need a Mortgage"
I probably hear this request at least twice a week! People who through no fault of their own have fallen on difficult times and have had a County Court Judgement (CCJ) awarded against them, have had to enter into a Debt Management Plan (DMP), gone into an Individual Voluntary Arrangement (IVA) or have faced everyone’s worst nightmare…Bankruptcy.
Of course, the above examples are the worst-case scenarios of Impaired Credit, but other factors will also cause issues when applying for a mortgage. For instance, having a default registered on a loan, late payments on Credit Cards, a missed payment on a mortgage…even something as simple as exceeding an agreed overdraft limit will have an effect on whether or not a lender will consider you to meet their lending criteria!
Impaired Credit Mortgage Availability
You may be surprised to hear that there are plenty of lenders seeking to help clients who have a less than perfect credit history. These specialist lenders are usually only accessible through Mortgage Brokers and for very good reason with the requirements of the lenders being fairly complex.
Here are a couple of the scenarios that we have seen recently:
A client had due to a series of unfortunate circumstances had come to over use Credit Cards and had got to a stage where they were “Robbing Peter to pay Paul”. They had gone into a DMP and had been running the DMP comfortably for three years. A change in fortune gave a substantial pay increase and they approached Abode Mortgages to see if we had a solution to their problem. We sourced a lender who was happy to offer a re-mortgage that would ‘mop up’ the DMP. The loan to value remained below 80% and the client reduced their monthly outgoings by a considerable amount. In two years’ time they should be in a position where they can remortgage to a ‘High Street’ lender.
A client had applied to their own Bank for a Mortgage and had been declined without any explanation. They bought their credit files in for me to look at and I immediately spotted that there was a telecommunications default on one of the credit files. A simple case of finding a lender prepared to accept a telecommunications default and the problem was solved.
Being refused a mortgage by a Bank or Building Society is never a nice feeling, especially if you have just sat in a branch for an hour or so, only to have to do the ‘walk of shame’ out through the Banking Hall.
This is where seeking the advice of a Mortgage Broker comes to the fore. Having access to the whole mortgage market place means that we will stand a far better chance of finding a lender whose criteria suits your own unique situation.
Whilst we cannot and will not guarantee finding you a deal…it may just be that your situation does not, at this time, meet any lenders criteria. If this is the case then we will advise you on how you need to change your situation to make yourself a potentially suitable borrower.
Having bad, poor or adverse credit is obviously not an ideal starting point for your mortgage application but you have to remember that if you are in this predicament you are not alone and there are many thousands of others who are in a similar situation.