Following the sub-prime crisis in August 2007 and full blown effects of the credit crunch that culminated in the collapse of several lenders, there are now very few options for those with an adverse credit history. Specialist lenders such as GMAC, SPML, Future Mortgages, Mortgages PLC, Rooftop & First National are no longer lending and there are only a small number of niche lenders left in the market but in view of this, criteria is tight and larger deposits are required.
With high street lenders significantly tightening their credit scoring models, there are a few lenders now offering ‘Almost Prime / Prime Plus’ products which ignore missed & late payments on unsecured credit and will allow defaults whether satisfied or not. However, if you have more than £500 registered in CCJ’s within the last 2-3 years then you will need at least 35% deposit or equity within your property and expect to pay extremely high rates of interest.
Lenders within the ‘adverse credit’ mortgage arena will usually ‘pigeon hole’ you into a specific product dependant on the level of adverse credit registered against you. These can range from the following but some of these products will require at least 50% deposit or equity:
Failed Credit Score / Complex Prime allows historic defaults & CCJ’s (satisfied or not) as long as none registered within the last 2 years. Typically a maximum credit report status of 2 on any unsecured agreement within the last 12 months but must be up to date at time of application.
Near Prime at 75% LTV would allow a maximum of 2 CCJ’s totalling £750 (satisfied for more than 6 months), 2 defaults but none in the last 6 months and no missed mortgage payments within the last 12 months however no bankruptcy, IVA or previous repossessions allowed. At 60% LTV Near Prime product would allow a maximum of £1500 in CCJ’s (satisfied or not) but none registered within the last 6 months, unlimited defaults and a maximum of 2 months mortgage arrears within the last 12 months but none in the last 3 months. Bankruptcy or IVA discharged at least 3 years ago and even a repossession if over 3 years ago.
Light Adverse allows up to a maximum of £4000 in CCJ’s (satisfied or not) but none registered within the last 6 months, unlimited defaults & a maximum of 3 months mortgage arrears within the last 12 months as long as none in the last 3 months. Bankruptcy or IVA discharged at least 12 months ago and even a repossession if at least 2 years ago.
Medium Adverse allows up to a maximum of £6,000 in CCJ’s (satisfied or not) but none registered within the last 6 months, unlimited defaults & a maximum of 3 months arrears within the last 12 months (one missed within the last 3 months). Day 1 discharged bankruptcy and current IVA’s as long as satisfactorily conducted and even a repossession if at least 2 years ago.
With adverse credit mortgage interest rates available from 3.99% for applicants with historic bad credit history and arrears, what have you got to lose? To search for the most up to date adverse credit mortgage deals for applicants with historic bad credit history such as CCJ’s & Defaults.
Check your credit history
We recommend obtaining a copy of your credit file though one of the three credit reference agencies, Experian, Equifax or Callcredit and we can review your file with you to explain exactly what the various entries mean. All of these companies are currently offering a free 30 day trial so if you are thinking of applying for a mortgage then we recommend taking advantage of this service so that you can see exactly what a lender will see when you apply for a mortgage and they credit search you.
We will provide you with advice of how to improve your credit rating so that we can get you a High Street mortgage as soon as possible.
* Please note that 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 £7.95 for the Equifax Credit Report & Score. A user can cancel their subscription with Equifax at any time.