If you think that problems with missed payments, county court judgments (CCJs) or even bankruptcy stop you from getting a mortgage, reconsider – new Which? analysis finds that there are currently more than 1,600 mortgage deals available to people with poor credit.
Which? analysed almost 5,000 residential mortgage deals available to first-time buyers, people looking to move home and people remortgaging, and located that 33% will consider someone who has had credit issues in the past.
More than 30% of the market will consider you if you’ve had a CCJ, while several in 10 deals are available to those who have gone bankrupt, based on our analysis of Moneyfacts data.
Each deal that accepts individuals with bad credit features its own criteria – and people who’ve had credit issues in the past may find that they are charged higher interest levels or asked to provide bigger mortgage deposits. However this year, it seems there are plenty of choices for people to obtain a mortgage even when they’ve had credit problems.
Bad credit mortgages – how many deals can be found?
Our analysis discovered that, of the 4,921 mortgage deals now available on the market, 1,662 will consider someone with credit issues.
The vast majority of these deals are fixed-rate, fixed-term mortgages – 88% as a whole – lasting between two and 5 years.
But a word of warning to first-time buyers who only have a small deposit and have had credit issues in the past: our analysis shows that just 137 (just 8% of) deals are available to anyone who has a 5% or 10% deposit.
The most common maximum loan-to-value (LTV) is 75%, meaning there’s a greater option for those with a minimum of a 25% deposit.
Mortgages after CCJs
A County Court Judgment (CCJ) is disseminated if you can't pay money that you simply owe and many other reasonable avenues to recover the money – letters, defaults, late payment notices – have been ignored and exhausted.
The great news would be that the vast majority (1,498) of bad credit deals accept people who have had a CCJ, although there are strict conditions.
There are 108 deals readily available for those who have had one CCJ in the past year, and no a lot more than three previously 3 years. But the CCJ can’t be for any a lot more than lb250.
Some 287 give you a CCJ of up to lb500, while 248 give you CCJs worth lb1,000 or even more.
Even if you’ve were built with a CCJ within the last year, there’s still hope for obtaining a mortgage – 164 deals are for sale to those who haven’t had a CCJ within the 6 months before you apply.
A satisfied court judgment – the one that has been paid off, solved or settled – is looked on more favourably. A settled CCJ disappears from your credit file after six years, there are plenty of lenders prepared to take you on if this sounds like the case.
Find out more in our guide to obtaining a mortgage with CCJs.
Mortgages after an IVA
An individual voluntary agreement, or IVA, is a contract between somebody that is within debt and also the company they owe the money to, which could sometimes help stave off bankruptcy.
If you cannot manage to repay your debts in full, an IVA enables you to come to an agreement using the companies to which you owe money to freeze the eye you’re paying and perhaps lessen the amount you owe for an affordable level.
Our analysis shows that you will find 591 deals open to people who have had IVAs – but in most cases, your IVA needs to be completed, as well as your debt settled. There are just two deals available for anyone who has open IVAs.
The more time which has passed since your IVA was completed, the greater choice you have. There are just 11 deals readily available for people who settled a year ago, and six for those who completed an IVA 2 yrs ago.
Waiting until three years after your IVA was completed seems to be a sweet spot, because the number of deals available jumps to 112. But you’ll get far more choice if there has been six years or even more as your IVA was completed – 387 deals are available for individuals this case.
Mortgages after bankruptcy
Bankruptcy is the process of writing off all of your debts, together with your assets being sold off to pay the money you owe.
You can't obtain a mortgage whilst you are still bankrupt. Your bankruptcy ends once you get a discharge notice – normally Twelve months following the date the bankruptcy order is made, though this can vary with respect to the terms provided to you at your bankruptcy hearing.
There really are a surprisingly high number of deals available for people who’ve been through this method – 670, or 13% of all of the available mortgage deals on the market.
Much like people who’ve had an IVA, the number of deals available to those who’ve only been recently discharged from bankruptcy is low. There are just 23 deals available for individuals who were discharged within the last 2 yrs.
The quantity of deals jumps to 150 after 3 years have passed since discharge; 51 require four or five years to possess passed; 13 after five years.
But the majority of deals (350) are for sale to people who’ve been discharged from bankruptcy for at least six years.
How to get a mortgage with bad credit
If you’ve missed debt repayments previously and also have marks on your credit rating, you will find things you can do to create yourself more attractive to mortgage lenders.
They may wish to see evidence that you’ve been responsible with repayments since your previous issues, making bill along with other debt payments on time.
It’s really important that you take steps to strengthen your credit score – for example ensuring you are on the electoral roll, limiting credit applications within the run-up to applying for a mortgage and keeping the quantity of credit you are using to under 20% of the overall limit.
Having a large mortgage deposit can make things easier: there's less risk for the lender should you possess a big slice of your property outright and you fall behind with payments in the future, as it will have a greater possibility of recovering the borrowed funds it's provided.
Find out more in our help guide to poor credit mortgages.
