An increased number of 95% mortgages have been made available by lenders following withdrawal of the Government Help to Buy Mortgage Guarantee scheme. There are now around 38 different lenders with a variety of schemes offering a purchase using only 5% deposit. Building Societies offer the majority of these schemes although the big 4 Banks are also represented. As high risk is being taken by lenders at this loan to value, an excellent credit rating is paramount. Fortunately for those applicants with adverse credit, there is one specialist lender, Aldermore that offers a 95% bad credit mortgage. This may also be suitable for applicants who fail 95% mortgage credit scores with high street lenders.
Criteria for the 95% Bad Credit Mortgage
- Mortgage / Secured Loan Arrears – No more than 1 month arrears in the last 12 months and no more than 2 months arrears in the last 24 months. Furthermore, no arrears in the last 3 months.
- Unsecured Loan Arrears – No more than 2 months in the last 24 months with none in the last 3 months.
- Revolving Credit Arrears – Where the balances exceed £3,000 then within the last 12 months, the arrears must be less than the equivalent of 3 months payments.
- CCJ’s / Sheriff Court Decrees – None registered in the last 3 years. CCJ’s registered over three years ago but only satisfied within the last 3 years must not exceed £500 in total.
- Defaults – None registered within the last 3 years.
- Bankruptcy / IVA – Must be satisfied for at least 6 years
- Pay Day Loans – None in the last 6 months
- Forced / Voluntary Possessions – Not Considered
Adverse credit registered over 3 years ago is considered but given the higher risk lending, this should be satisfied.
What Rates Are Available?
Assuming that you need a 95% bad credit mortgage then Aldermore currently offer the following:
- 4.98% 2 year fix with £999 arrangement fee
- 5.18% 2 year fix with no arrangement fee
- 4.98% 3 year fix with £999 arrangement fee
- 5.18% 3 year fix with no arrangement fee
- 5.08% 5 year fix with £999 arrangement fee
How do I find out whether I meet the lender’s criteria?
As the lending criteria for this scheme is complex, we will happily review your credit file when you contact us. We recommend obtaining an up to date Copy of your credit report covering your last 6 years address history. This can be obtained by clicking the following link: Equifax Credit Report. Most lenders use Equifax so it is helpful to see what will be seen by lenders on your credit file. Equifax are offering a free 30 day trial and once we have obtained the funding that you need then you can cancel the membership if you feel that you no longer need it.
Monthly fees apply to the consumer following the 30 day Free Trial of these products if the user does not cancel within the trial period. The monthly fees are £14.95 for the Equifax Credit Report & Score. A user can cancel their subscription with Equifax at any time.
Supporting Documents Required for Assessment
In addition to your credit file, we will need the following supporting documents in order to fully assess your individual circumstances:
- Photographic Identification by way of Passport or Driving Licence
- Proof of address dated within the last 3 months. Postal Utility Bill or Bank Statement or alternatively a current Council Tax Bill
- Payslips from the last 3 months & latest P60 (if employed).
- Last 3 years HMRC online tax calculation summaries and corresponding tax year overviews (if self-employed)
- Bank statements from the last 3 months showing income credited and day to day living expenditure
- Last annualised lenders statement in respect of any first or second charge mortgage held
Mosaic Mortgages are specialist mortgage advisors that can help with all your 95% bad credit mortgage enquiries. The initial criteria assessment as well as obtaining a credit scored decision in principle from the lender is a free service offered by Mosaic Mortgages. Contact us for a no obligation quote and to see whether you are eligible for any of the specialist adverse credit mortgage schemes currently available.