what to do if you have
ADVERSE
CREDIT
can I get a mortgage with
ADVERSE CREDIT?
An adverse credit mortgage is a type of mortgage designed for individuals who have a history of poor credit or adverse credit events, such as missed payments, defaults, or bankruptcies.
These mortgages are tailored to help those with less-than-perfect credit histories obtain financing for a home. Here’s a closer look at what an adverse credit mortgage entails:
Key Features of Adverse Credit Mortgages
For Borrowers with Poor Credit: These mortgages cater to individuals who have experienced credit issues in the past, including late payments, county court judgments (CCJs), or insolvency.
Higher Interest Rates: Due to the higher risk associated with lending to borrowers with adverse credit, these mortgages often come with higher interest rates compared to standard mortgages.
Larger Deposits: Lenders may require a larger deposit or down payment to offset the increased risk. This means you might need to save more before applying for an adverse credit mortgage.
Flexible Criteria: Lenders who offer adverse credit mortgages typically have more flexible criteria compared to those providing standard mortgages. They may consider factors beyond just the credit score, such as your current financial situation and ability to make payments.
Improved Credit Assessment: Some lenders focus on recent positive credit behavior rather than past issues. Demonstrating that you have managed your finances well in recent times can help improve your chances of approval.
Types of Adverse Credit Mortgages:
Fixed-Rate: Offers a consistent interest rate throughout the term of the mortgage, providing stable monthly payments.
Variable-Rate: Interest rates can fluctuate based on market conditions, which can affect monthly payments.
why consider an
Adverse Credit Mortgage?
Opportunity for Homeownership
Adverse credit mortgages provide an opportunity for individuals with poor credit histories to buy a home or refinance their existing mortgage.
Path to Credit Improvement
Successfully managing an adverse credit mortgage can help rebuild your credit history over time. Regular, on-time payments can improve your credit score.
Specialist Lenders
Some lenders specialize in adverse credit mortgages and have a deeper understanding of the challenges faced by borrowers with poor credit. They can offer tailored advice and solutions.
considerations
Before Applying
Review Your Credit Report
Check your credit report for accuracy and address any errors before applying. Understanding your credit history can help you make a stronger case to lenders.
Improve Your Credit Score
If possible, work on improving your credit score before applying. Pay off outstanding debts, reduce credit card balances, and ensure all bills are paid on time.
Consult a Mortgage Broker
A mortgage broker who specializes in adverse credit can help you navigate the process, find suitable lenders, and get the best deal based on your financial situation.
Understand the Terms
Carefully review the terms and conditions of the mortgage, including the interest rate, fees, and any potential penalties.
