Virgin Money has announced it will begin accepting mortgage applications from anyone who has had County Court Judgements (CCJs) against them or defaulted on previous loans.
The lender will now open its products to individuals who have satisfied CCJs up to lb500 and have defaults as high as lb2,000 on their own credit history, provided these are at least three years old.
So, how do these deals rival other offers available on the market for applicants with less-than-perfect credit?
Which? explores the way the Virgin Money’s mortgages match up against other deals and the best rates available for people with a poor credit history.
What will Virgin Money mortgages accept?
Virgin Money announced now it would unwind it’s lending criteria to permit individuals with CCJs and defaults to use under certain circumstances.
However, there are limits – it'll still not accept applicants if someone voluntary arrangement (IVA) or bankruptcy is pending, or if they have been in recurring arrears.
Virgin Money offers some attractive deals for both first-time buyers and individuals looking to move home.
First-timers looking for a two-year mortgage at 95% loan-to-value ratio (LTV) could secure an offer for just two.99% (4.6% APRC). Alternatively, you could secure a five-year deal fixed-rate deal for 3.35% (4.5% APRC).
And if you’re looking to upgrade, and have an LTV of 75%, you could find a two-year deal for 1.75% (4.4% APRC) or perhaps a five-year deal for 2.09% (3.8% APRC).
But even where your choices are restricted by your credit history, its smart to look around. There are other mortgage deals available on the market which come in a lower rate that may be worth considering.
Keep in your mind to determine the fees and charges as well as the initial rate – a high fee might make an offer much less affordable. It's also wise to look into the conditions and terms, including early repayment bills you might face from repaying the mortgage prior to the full term.
Who offers poor credit mortgages?
In January, Which? analysed the mortgage market and located another of 5,000 mortgage deals are available to people with bad credit.
Our table shows different lenders’ rules around bad-credit mortgages, including their criteria for people with bad credit, CCJs, IVAs or bankruptcies.
Best bad-credit, first-time-buyer deals
Which? has studied MoneyFacts to get the best fixed-term and discount first-time buyer deals that are available to applicants having a poor credit history.
We’ve centered on fixed-rate mortgages, but your circumstances may suit a tracker mortgage – which varies with the base rate – or perhaps a discount deal tied to the lender’s standard variable rate.
The best two-year fixed-term deals available to first-time buyers are shown within the table below. For first-time buyers, all the deals below are available up to and including loan-to-value ratio of 95%.
| Provider | Initial rate | APRC | Who is accepted? |
| Marsden BS | 2.69% | 5.6% | CCJs, poor credit |
| Skipton BS | 2.83% | 4.7% | CCJs, IVAs, bankruptcy |
| Marsden BS | 2.89% | 5.6% | CCJs, poor credit |
Alternatively, you might be looking to fix for a longer time period.
The best five-year fixed-term deals for first-time buyers are displayed in this table.
| Provider | Initial rate | APRC | Who is accepted? |
| Digital Mortgages by Atom Bank | 3.24% | 3.76% | CCJs |
| Skipton Building Society | 3.27% | 4.4% | CCJs, IVAs, bankruptcy |
| Skipton Building Society | 3.32% | 4.4% | CCJs, IVAs, bankruptcy |
Top bad-credit home-mover deals
Which? has additionally looked at the best deals for property owners who are looking to buy a brand new property but may have suffered credit problems.
The top fixed-rate two-year home mover deals are provided within the table below. For property owners, all the deals are available up to and including loan-to-value ratio of 75%.
| Provider | Initial rate | APRC | Who is accepted? |
| Digital mortgages by Atom Bank | 1.44% | 3.64% | CCJs |
| Digital mortgages by Atom Bank | 1.49% | 3.66% | CCJs |
| Yorkshire Building Society | 1.63% | 4.3% | CCJs |
Source: Moneyfacts
And if you’re looking for a five-year deal like a home owner, you can observe the very best fixed-rate deals below.
| Provider | Initial rate | APRC | Who is accepted? |
| Digital mortgages by Atom Bank | 1.94% | 3.27% | CCJs |
| Yorkshire Building Society | 1.96% | 3.9% | CCJs |
| Digital Mortgages by Atom Bank | 1.99% | 3.29% | CCJs |
How to obtain a mortgage with bad credit
When you apply for a mortgage, the lender will analyse your full credit history. The full circumstances is going to be taken into account, including when the issues occurred and how large your defaults were.
This means a missed utility payment would be treated differently to some County Court Judgement, for example.
Lenders will set their own rules based on how to deal with applicants with credit issues. However, you can find a brief explanation of the general approach below.
Keep in mind that being rejected for any mortgage can bring down your credit rating further, so your quest before you apply.
Getting a home loan with a County Court Judgement
A CCJ could be ordered if you owe somebody money and fail to pay it. Banks will frequently think about the amount active in the CCJ, therefore it could be treated differently if it was for say lb250 when compared with one for more than lb1,000.
In general, high-street lenders need a CCJ on your record if it's more than three-years-old and paid or satisfied.
Getting a home loan with missed payments (default)
Missing a mortgage payment is the worst the kind of default, whereas neglecting to make a payment for other types of bills is usually thought to be less serious.
If you have had a series of missed payments, you'd be advised to build up past paying bills and loans fully as well as on time before trying for a mortgage.
Getting a mortgage after bankruptcy
Most high-street lenders will refuse to lend to people with a bankruptcy on their record even if it’s in the distant past.
However, specialist lenders may think about the application if the bankruptcy has been discharged and more than six years old.
