Applying for a ‘bad credit mortgage’ is similar in many ways to applying for a ‘regular mortgage’ or a ‘high street mortgage’. However, there are can be several key differences dependent on the severity of the bad credit involved.
Most specialist lenders who offer bad credit mortgages will only deal with specific mortgage advisers with whom they have an existing relationship. Using a specialist mortgage adviser who has access to these lenders and the type of things they want to see will give you every chance of securing a mortgage.
The application process
Once you have found a specialist mortgage adviser who is experienced in dealing with these type of bad credit mortgages you can expect to provide the usual documentation you would when applying for a typical high street mortgage such as:
Photo ID (passport / U.K. Driver’s license)
Proof of address (e.g. recent postal bank statement / council tax bill)
Proof of earnings (e.g. recent payslips / SA302’s/ Financial accounts )
Recent bank statements (usually latest three months)
Proof of deposit (e.g. bank statement / pensions statement)
Dependent on the severity of the bad credit involved you may need to provide additional documents and information compared to a regular mortgage application. The more severe the bad credit the more documents and information you can expect to provide. This may be include:
Written explanation as to why and on what date the incidents of bad credit occurred
Written explanation as to how your bad credit has been resolved and what measures have been put in place to ensure this incident does not occur again
Bank statements - up to 12 months
Your specialist mortgage adviser will be able to help with the process. Once you and your specialist mortgage adviser have all the required information the application will be submitted on your behalf.
How the applications are assessed
Following submission of your application it will be assessed by an Underwriter who may request additional information via your mortgage adviser who will keep you updated on the progress of your application. When reviewing incidents of bad credit the Underwriter will base their decision on certain key criteria, examples of this are:
Type and severity of bad credit (e.g. arrears/default /CCJ /Bankruptcy).
Has the bad credit been repaid or remain outstanding?
If the bad credit has been repaid, when it was repaid.
When was the bad credit was registered?
Monetary value of bad credit registered.
Reasons that led to the bad credit
Number of incidents
Type of account the bad credit relates to (e.g. credit card/store card/loan/mortgage)
Prior to application your adviser will have discussed this criteria with you and will know the level of bad credit the lender and Underwriter will be comfortable with.
Once the Underwriter is satisfied all the information has been provided your specialist lender should be in a position to provide you with a formal mortgage offer which will be sent to yourself, your appointed solicitor and mortgage adviser ready to complete on the proposed purchase or remortgage.