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Adverse Credit Mortgages in 2016

Adverse Credit Mortgages in 2016

With personal debt on the rise, Government cutbacks still taking effect and the economy stuttering post-Brexit, it is commonplace for mortgage applicants to have some ‘bad’ credit history and have a need for adverse credit mortgages.

The most common causes of ‘adverse credit’ are unpaid debts or late payments of loans or credit cards. However, this can extend to mortgage arrears, defaults, CCJs, repossession and even bankruptcy or IVA.  An adverse credit history will obviously make it more difficult to find a mortgage provider but it is not impossible. Depending on individual circumstances and a mortgage broker assessing income, deposit and the bad credit registered, it may still be possible to obtain a mortgage / remortgage.

Generally speaking adverse credit mortgages will cost more than a high-street mortgage because they are a higher risk. Therefore, we tend to recommend that clients remain with a bad credit mortgage lender for 2-3 years. You should use the bad credit mortgage as a credit repair scheme. Once you are free from your bad credit history (adverse credit entries will drop off your credit file 6 years following initial registration) then it is best to look for another mortgage with lower interest rates.

Those with adverse credit need a mortgage product to suit their particular circumstances. Pre-credit crunch there were a plethora of lenders willing to assist those with a bad credit history. However, in the aftermath of the 2007 sub-prime crisis  the majority of these lenders disappeared. Fortunately, now almost 10 years later, the bad credit mortgage market is starting to expand again. There are a number of specialist bad credit lenders that are willing to assist borrowers with an adverse credit history. However, lending criteria is very specific as to the level of defaults, CCJ’s and arrears that will be allowed. It is now also possible to consider a discharged bankruptcy & IVA’s.

Available Adverse Credit Mortgages

  • <95% Loan to value – Help to Buy Mortgage Guarantee Scheme. No CCJ’s or Defaults registered in last 3 years and should be satisfied or predominantly repaid. No Bankruptcy / IVA within 6 yerars
  • <90% Loan to value – Standard schemes. No CCJ’s or Defaults registered within 2 years. CCJ’s must be satisfied and no bankruptcy or IVA’s
  • <85% Loan to value – Standard schemes. CCJ’s 1 in 24 months up to £3,000 (0 in 12). Defaults 2 in 24 (0 in 12). Arrears Max status 2 in 36 (0 in 12) but no bankruptcy / IVA
  • <60% Loan to Value – Credit Repair schemes. Day 1 discharged bankrupts. IVA accepted if satisfied or satisfactorily conducted. CCJ’s Max £6,000 in 24 months (0 in 6). Defaults 0 in 3 months. Arrears – Max 3 missed in 12 (1 in 3).

Specialist lenders still active in the bad credit mortgage market tend not to be high street providers. Mosaic Mortgages can help you find the right lender to suit your individual circumstances. We have in-depth knowledge of all adverse credit mortgages and will match the right scheme for your needs. Our aim is to get you back to a high street lender as soon as your credit history allows it.

The author, Shaun Bielby has over 25 years experience in financial services and is a specialist mortgage and protection advisor with Mosaic Mortgages who are mortgage brokers that give independent mortgage advice to first time buyers, borrowers with an adverse or bad credit mortgage history or those looking to invest in buy to let.