Can you get a mortgage with Bad Credit?
The short answer is yes. ‘Bad credit mortgages’ are becoming increasingly common with more and more lenders understanding that past financial mistakes and problems are part if many people’s life.
There is a select number of specialist lenders who can offer mortgages to people who have ‘bad credit’ in the from of any of the following areas:
Missed / late payments on unsecured credit agreements (credit cards, loans etc)
County Court Judgements (CCJs)
Debt management plans (DMPs)
Missed / late mortgage payments
The severity and recency of the bad credit will generally determine the interest rate you can expect to pay. The interest rate you pay will usually be higher than you find on a typical high street mortgage. However, you may be surprised by some of the interest rates that a specialist mortgage adviser can secure even when the applicant has a history of bad credit.
Involuntary arrangements (IVAs)
I’ve taken a recently taken a Mortgage Payment Holiday. Are there any the consequences to my credit file having done this?
In terms of your credit file the important message is that taking a payment holiday will not be captured as a missed payment and will therefore have no negative impact on your credit score.
This being said, it is worth noting that taking a payment holiday could affect future credit applications.
For example, many Lenders are now asking whether the applicant or potential borrower has applied for or taken a Mortgage payment holiday, suggesting this maybe a consideration for the Lender.
How much could I save per month if I remortgage to a better deal?
How long is a piece of string? The savings that could be made can vary drastically from modest to significant.
Perhaps the most valuable commodity that be saved though is time. For example, if Mr Smith reverted onto his high street Lenders Standard Variable Rate (SVR) of 4.24%. His mortgage of £200,000 would take 25 years to repay at £1,082 per month.
If Mr Smith decided to review his mortgage with a Broker, he would find that an interest rate of 1.24% would be available to him. By simply remortgaging to this rate and making the same monthly repayments he would pay his mortgage off in 17 years, 8 years sooner than if he were to remain on his previous rate.
If, however, Mr Smith opted for a monetary saving he could reduce his monthly repayments to £775 per month. Giving him a saving of over £300 per month
It is important whether you are interested in saving either time or money to give yourself plenty of time and make contact with a Broker who will be able to review your rate and secure you the best possible rate available. We would recommend getting in touch as early as six months before the expiry of your current deal to get the wheels in motion.
What are the benefits of using a Broker compared to just going to my Bank like I usually do?
Getting a mortgage is one of the biggest financial decisions you’ll ever make and for most people this will be the biggest debt of your life. Using a Broker will bring a whole host of benefits when it comes to either buying a home for the first time or reviewing your mortgage when your deal is coming to an end.
Some of key reasons you should use a Mortgage Broker are they:
Give you access to deals and Lenders from across the market including ones that are not available to the public. If you go direct to your Bank, your Bank you are simply limiting you to their products, meaning it’s unlikely you’ll have the best offering on the market.
Liaise with the Banks and building societies for you meaning you don’t have to.
Understand the Bank and building societies intricate lending criteria, ensuring you have every chance of success before any potential mortgage application.
Have specific contacts at the Banks and Building societies and can use this as leverage to help get mortgages across the line that may not have been possible if you were to gone direct.
To conclude there are a whole host of reasons to enlist the help of a Mortgage Broker.
Perhaps the biggest reason for this though would be to simply put yourself in the hands of someone with years of experience and who understands how to navigate all the obstacles of applying for a mortgage and buying a home.
Buying a home can be one of the most stressful experience of one’s life, if some of this stress can be taken away by knowing your mortgage is taken care of then that can only be a good thing.
Able to compare deals and Lenders on a ‘total cost’ basis. Most people without the help of a Broker will be led to the best rate. However, this doesn’t always result in the cheapest overall cost for the client. For example, many deals now have product fees attached or give cashback on completion. A Broker will factor all of this in for you and recommend the cheapest overall cost meaning more money in your pocket
Can I apply for a new/remortgage whilst on Furlough?
Absolutely, yes! The good news is that most Lenders are very accommodating of these strange and uncertain times that we find ourselves in. The general stance from Lenders is that they will use whatever your furloughed income is to support your mortgage application.
For example, if your income is usually £50,000 per annum, however due to COVID 19 you have been placed on Furlough and are only receiving 60% of your salary then the Lender would treat your income as the reduced amount of £30,000.
Some Lenders will allow the applicant to use their un-furloughed salary, however this will normally require a letter from the employer to confirm when the applicant will be returning to work on their pre-furloughed basis.
Lenders will also normally treat on an individual basis and overall merit of the application.