Expert advice from the CLS bad credit mortgage broker

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How to get a mortgage with bad credit

There’s a common misconception that mortgage companies will never lend to those with a poor credit history. Though having a credit record that is less than squeaky clean may limit your options, you certainly shouldn’t give up hope of ever purchasing your own property if you have encountered financial difficulties in the past. There are plenty of bad credit mortgages on offer from specialist lenders that are willing to be more flexible with their criteria and consider cases from individuals who have had arrears, defaults, county court judgements (CCJs), individual voluntary arrangements (IVAs), been placed on debt management plans or suffered bankruptcy in the last six years.
You may need to pay a slightly higher interest rate when you first take out the loan, as the provider will automatically consider you to be a higher risk. But if you keep up your repayments, and take active steps to improve your credit rating, there’s no reason why you can’t find yourself in a much better financial position in the months and years to come – and access a much better deal when you eventually come to remortgage.

Here, you’ll find more information on adverse credit mortgages, along with a list of the things you can do to improve your chances of securing a mortgage offer if you have a poor credit history.

If you’d rather discuss your options during a consultation with an experienced adverse credit mortgage broker, contact CLS Money today. Our advisors have excellent connections with a range of lenders from the wider market who may be willing to take on cases like yours. They are not limited to popular products from the major banks and building societies and can source deals from more niche providers that specialise in helping borrowers in your situation.

Credit and credit reports explained

When you take out a loan or agree with a lender to pay for goods and services at a later date, you’re entering into what’s called an instalment credit agreement. The lender will allow you to pay in instalments, or with a lump sum, on the condition that these payments are met at certain times, and possibly even with added interest.
Revolving credit agreements, such as those taken out with credit cards, enable you to borrow money as and when you need it, within a set limit. Once you have paid off some or all the debt you have acquired, you can re-borrow as much as you like, within the confines of the limit the lender has set for you.
Alongside your basic information, such as your name, address and birth date, a timeline of all your instalment and revolving credit commitments, aka all the credit accounts you have opened and closed in the last few years, will be visible on the credit reports that are readily available from credit agencies such as Experian, Equifax and TransUnion. Crucially, these reports will also contain detailed of missed payments, account collections, foreclosures, repossessions, and bankruptcies.
These reports can be viewed by anyone who is considering offering you a credit agreement.
To help companies make better lending decisions, the three main credit agencies listed above will analyse all your credit data to calculate your overall credit rating. They will assign you a score between 300 and 900, and it is this score that will help lenders determine what kind of borrower you are.

The lower the score, the higher the risk to a lender.

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What is a bad credit mortgage?

When we talk about adverse credit mortgages, we are referring to mortgages specifically designed for people who have struggled to keep up with credit agreements in the past, and who therefore have a lower than average credit score.

How difficult is to get a mortgage with adverse credit?

Having a bad credit score will affect your chances of getting a mortgage because it demonstrates to the lender that, based on your previous financial behaviours, you are more likely to default on your payments and therefore put their capital at risk.
Mortgage companies will explore many factors when they are assessing your application. To calculate interest rates, preferred loan to value (LTV) ratios and other mortgage terms, lenders will analyse your adverse credit file in more detail to work out what happened, how long ago it happened, and what impact the incident(s) had on your overall financial position.
If they don’t like what they see, they may choose to offer you a deal with higher interest rates to mitigate risk, or they may ask you to put down a higher deposit towards your purchase as extra security. Or, they may decide not to offer you a deal at all.
Don’t be disheartened, though. Lenders’ appetite for risk has increased in recent years, and more and more banks and building societies are now offering specialist mortgages for people with a history of poor credit. This influx of new adverse credit products into the market has led to increased competition, too, and rates have decreased as a result. You just need to look beyond the mainstream High Street providers towards niche providers who are prepared to take a view on your circumstances.
(Remember, bad credit mortgages are not always advertised. For the best chance of finding a great deal, you need to speak to an experienced mortgage broker who has direct access to products from across the whole of the market.)

What will lenders accept – and what won’t they accept?

It’s a great question – but as affordability criteria vary from lender to lender, it’s not one that can be answered in a sentence or two.
Some black marks on your credit file will have more of an impact on your overall credit score than others. For example, a period of bankruptcy will be much more concerning to a lender than a couple of missed utility bills. Similarly, an issue that happened five years ago will hold much less weight than something that occurred within the last 12 months.
However, incidents that seemed minor at the time will continue to be displayed on your file for up to 6 years. So, to increase your chances of securing a good mortgage deal, you need to avoid defaulting on payments altogether – or at least wait until these issues have been removed from your file.
It’s worth noting at this point that your credit rating is only one piece of the puzzle. Lenders will have many other eligibility requirements and will nearly always look at your employment status, how much you earn, what kind of property you want to buy and how much you want to borrow in addition to your credit history before coming to a final lending decision.
They will also be more willing to accept your case if they can see you have taken steps to improve your position and are now much more financially secure.

What kind of deposit will I need?

If you want to buy a house with bad credit, you will typically need to put down a bigger deposit than someone with a better credit record.
In the UK, the usual minimum requirement for a deposit is 5% of the purchase price. For Buy to Let investments, this is slightly higher at 15%. If your credit issues are comparatively minor – and if they took place a matter of years, not months, ago – there may be lenders in the wider market who will consider a loan to value (LTV) of between 90% and 95%. However, if your credit report contains more severe marks, such as IVAs, repossession orders or bankruptcy notices, and these took place within the last 3 years, you should expect to have to put down closer to 25%.
If you do not have a sizeable deposit, you could look into getting a residential home loan with the help of a guarantor. There’s still no guarantee your case will be accepted, though, as the lender may still consider you to be too much of a risk even if a friend or family member is willing to vouch for you.

Can I get a mortgage with late payments on my credit report?

Yes – but you will likely need to approach a niche lender as opposed to a High Street bank. Mainstream mortgage providers use much stricter eligibility criteria and may not look kindly upon individuals who have been unable to keep up with bill, rent or mortgage payments in the past.
You will have a much better chance of success with a mortgage lender who is willing to delve a little deeper into your credit file in order to understand why the payments were missed in the first place. Additionally, you will also be more likely to secure a mortgage with a history of late payments if these oversights happened more than three years ago, and if you can prove that you are now on top of your finances and are not in arrears with any of your credit accounts (ie, you do not owe more than one payment for the current month).
As always, we would suggest getting specialist advice from our bad credit mortgage advisors, who have a great deal of experience in securing home loans for people with missed payments on their credit file.

Can I get a mortgage with a CCJ?

Some lenders will dismiss your case straightaway if your credit file contains mention of a County Court Judgement (CCJ), even if it has been settled. Others will take a more positive view on the situation as long as you meet other distinct eligibility criteria, you have a reasonably sized deposit (usually 10% or more ), and/or your CCJ was registered more than three years ago.
CCJs registered in the last twelve months will have much more of a negative impact on your chances of securing a mortgage offer. Particularly large CCJs, multiple CCJs, and satisfied CCJs will restrict your options further.

Can I get a mortgage after defaulting?

Many lenders will not loan to someone with defaults on their credit file. However, you’ll be pleased to hear that there are some specialist default mortgage providers out there that will be prepared to review all of your credit reports – not just one – and assess the level of risk involved in the loan from there.
Much like with CCJs and other kinds of late payments, your ability to get a mortgage with defaults will really depend on how long ago these defaults took place, the types of accounts you owed money to, and when these debts were settled.
Satisfied defaults are considered better than unsatisfied ones, because they are proof that even though you have failed to repay your debts in the past, you have since straightened out your finances. Minor defaults, such as missed phone contract payments, will be taken less seriously than defaults made on mortgage payments or secured loan payments.

Can I get a mortgage if I’m on a debt management plan (DMP)?

Yes – but you will need to be able to prove that you can afford your mortgage repayments on top of any outstanding debts.
If your debt management plan has been in place for some time, and you have been successfully meeting all your payment obligations since it began, many lenders will consider you to be a lower risk candidate, as you have already proven that you have the means to satisfy the plan’s terms. If you have taken out the DMP in the last six months, however, your options may be more limited.
Your case will also depend on what these debts were relating to. For example, if you are on a plan to pay off unsettled store credits, lenders will be likely to look at your situation more favourably than if you are still tackling a credit card overdraft.
Bear in mind that if you are planning to get a mortgage on a debt management plan, your income multiples may be affected – and it’s these multiples that ultimately determine how much you can borrow. Somebody with a clean credit file and no DMP may be able to obtain up to five times their income, whereas an individual on a DMP may only be offered four times this total.
You may also find that you need to enter into a mortgage deal with higher interest rates, and/or you need to put down a higher deposit to satisfy the lender’s risk mitigation criteria.

Will an IVA affect my mortgaging prospects?

Some lenders will automatically decline an application from anyone who has ever had an individual voluntary agreement (IVA) in place. This is because a history of being on this kind of debt repayment plan indicates that the person has struggled with their financial commitments in the past.
But if you have (or have had) an IVA, don’t despair. A growing number of lenders are accepting applications from those who want to mortgage or remortgage with an IVA on their credit file. These companies will investigate your credit issues and assess them according to their frequency and severity.
If you can, wait until you have either finished paying the IVA off or it has dropped from your file before approaching a lender for a loan. (It normally takes 6 years for an IVA to disappear.) Doing so will improve your credit profile and give you access to much better IVA mortgage deals.
If this isn’t possible, and you’re keen to make a purchase or remortgage your existing home while the IVA is still present, contact our brokers to discuss your circumstances in more detail and they will connect you with providers who may be able to help.

Can I get a mortgage if I’ve been declared bankrupt or am currently bankrupt?

If you have been made bankrupt in the past 6 years and are either struggling to get a mortgage or worried that you might not be accepted, there are post-bankruptcy mortgage options available and we can help!
If you have been discharged for at least 12 months, there could be available lenders that are willing to look at your options, your interest rate may be slightly higher initially, as mortgage lenders will consider you a higher risk. However, if you keep up your repayments, your credit rating should improve and should enable you to remortgage to a standard mortgage with a lower rate after a few years.

Can I remortgage my home with bad credit?

It is certainly possible to switch to another mortgage deal at the end of your current term if you have a history of adverse credit. You will be able to access a better range of deals if you can settle as many of your outstanding debts as possible before your mortgage is up for renewal, and if you can prove that you have stayed on top of your mortgage repayments to date (with no exceptions).
If you’re concerned that your bad credit history may affect your remortgaging prospects – or you are worried that having little to no credit activity might hinder your chances of securing good terms – speak to the team here at CLS Money well before your existing term is due to end. We have helped many applicants find suitable remortgaging options even when there is evidence of defaults, CCJS, IVAs and other marks on their credit files.

What kinds of specialist mortgages could I get with adverse credit?

Depending on your circumstances, you may need your broker to look at a more niche mortgage arrangement. Requiring a complex mortgage may narrow your chances of being able to get a deal – but because there are more lenders in the market who are specialising in adverse credit mortgages, it’s always worth checking to see what kinds of products are out there before giving up on your dream of owning your own property.

Expat mortgages

Banks and building societies often deem expatriates to be higher risk, even if they have an acceptable credit status. Add into the mix that it is often trickier to trace the credit history of people who have lived abroad for some time, and you can understand why more mainstream lenders may not want to offer a mortgage to someone in these circumstances. However, there are specialist mortgage providers out there who are willing to assess mortgages for expats on a case by case basis – and these are the kinds of companies you need to approach if you are an expat with a history of poor credit.
Bear in mind that if you are looking to purchase a property in another country, the information here may not apply, as you will need to satisfy the eligibility criteria of international agencies.

Second home mortgages

You may think that, if you have a history of adverse credit, you will automatically be refused a mortgage for a second home. But because the lender can use your first property as collateral, they may be more inclined to offer you a deal. As with any mortgage application, the key question is this: when all of your outgoings, debts and other mortgage repayments are taken into consideration, will you be able to afford to pay back what you owe on your second property? If the answer is no, we would recommend settling some of your debts before considering another large-scale purchase.
As well as taking your credit score into consideration, lenders may calculate your debt-to-income (DTI) ratio to see if the monthly payments will be within your means. If your total debts are less than a predetermined percentage of your income, you may be eligible for a loan. A debt-to-income ratio of less than 40% is much more favourable, so try to aim for this wherever possible to maximise your chances of getting a second home mortgage with bad credit.

Large home loans

It’s not impossible to borrow a larger amount of money if you have a history of adverse credit – but it certainly can be challenging to find a lender willing to release these kinds of funds.
If you are looking to secure a much larger loan, we would highly recommend getting in touch with our mortgage brokers for specialist advice. They will be able to search the whole of the market to find lenders who have looser eligibility criteria and who are willing to look at your individual circumstances.

How can I increase my chances of getting a mortgage if I’ve got a poor credit history?

Follow these steps, and you will be able to approach potential adverse credit mortgage lenders with a much stronger case.

1. Get hold of your existing credit reports

Forewarned is forearmed, as they say. Before you even think about looking for mortgage deals, find copies of your current credit reports to see which credit issues are still showing up, and which have already dropped.
Lenders will usually source reports from the three main credit agencies – Experian, Equifax and TransUnion – which will each contain information on your previous loans, credit card bills, overdrafts and utility accounts. To access your free credit reports click here. (Try it FREE for 30 days, then £14.99 a month - cancel anytime)
Remember, each of these reports may display slightly different information. If you spot something on any of them that you believe is incorrect, contact the credit provider to ask them to update their records, or ask the agency themselves to look into the problem.

2. Optimise your credit rating

In the 6 to 12 months leading up to your mortgage application – or longer, if possible – try to settle as many of your outstanding accounts as you can. This will make you much more attractive to lenders, as it will prove you are serious about getting your financial affairs in order. Plus, paying off as many debts as possible will ultimately lower your debt-to-income ratio and free up more monthly capital that you will be able to put towards your mortgage repayments.
Want another top tip? Make sure you’re registered on the electoral roll with the address that will eventually be on your mortgage application. This gives lenders proof of your residency.

3. Raise as much deposit as you can

Mortgage lenders are much more likely to consider your application for an adverse credit mortgage if you are able to provide a higher deposit upfront. We appreciate that it can be difficult to grow your savings pot if you are still grappling with unpaid debts – but the more you can put towards your purchase, the better. If you want to be able to access the most competitive interest rates, aim for between 15% and 25% of the purchase price.

4. Avoid making multiple mortgage applications in a short period of time

Every time you make a credit application online, or make a request to a mainstream bank for a credit loan, potentially a ‘hard’ search could be left on your file. Hard credit searches and rejected applications may signal to other potential lenders that you are seeking additional finance, or you are having trouble securing finance. So, when you’re enquiring about your mortgage, obtain a credit report first to provide to your mortgage advisor, they will then be able to find out which lenders could potentially accept your application, without going through the guess works with multiple lenders. If we can see that hard credit searches will drastically impact your mortgage application, we will apply to lenders who offer soft searches. These will not be visible to other companies but will still give you a good idea of what you can borrow and how likely you are to be accepted.

5. Seek advice from a specialist adverse credit mortgage advisor

There really is no substitute for professional advice from a bad credit mortgage broker with in-depth knowledge of what’s on offer from different lenders. Speak to a member of our team today
By working with an advisor who has access to the whole of the market, your search for the ideal mortgage deal won’t be limited to the products on offer from mainstream banks and building societies, which will be likely to be out of your reach anyway due to your questionable credit history.
Instead, you’ll be able to source direct deals from mortgage providers who are known to be kinder to people with bad credit. What’s more, your broker will be able to suggest ways to strengthen your application so you can access the best possible deals.
For more information on how to improve your credit score, check out our latest video.

Your adverse credit mortgage checklist

Want to purchase a new property, but worried that your poor credit history will be held against you when it comes to how much you can borrow? Here’s what you need to do to attract better terms from a lender that is willing to consider your case:

At CLS Money, we specialise in securing home loans for people with adverse credit.

We know that, if you have a history of bad credit, securing the right mortgage can feel like a daunting task. There’s so much to consider, especially when it comes to taking the right steps to maintain a better credit score and prove to lenders that you’re a responsible borrower.
Our specialist bad credit mortgage broker understands the obstacles you’re facing. But perhaps more importantly, they have the knowledge, the experience and the contacts to greatly improve your chances of finding a mortgage that will support your longer term goals.
We have access to the whole of the market, which means we can source mortgage offers from niche lenders with more flexible eligibility criteria than many of the High Street banks. We also have an innate understanding of what these specialist lenders are looking for, and we’ll be able to help you optimise your application to give you the best possible chance of success.
You will also get access to our CLS portal, which allows you to quickly and conveniently upload any documents that support your case, as well as stay up to date with the progress of your application.
Contact us today to book your free, no-obligation consultation at a time that suits you. Evening and weekend appointments are available.

How a bad credit mortgage works

3 simple steps to getting a mortgage with bad credit

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    As a responsible broker, we want your mortgage to always be the best fit for you. So when it's time to review it, we will be here to help.

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Getting a mortgage FAQs

Still have a question?

Our friendly advisors are always happy to help with your mortgage enquiries, so call us for a no-obligation chat.

We can even provide you with the advice you need to secure an Agreement in Principle, so you can move one step closer to securing your dream home.

Find out more
What is a mortgage?

A mortgage is a loan from a bank or building society that enables you to purchase property. The loan is repaid with interest over a number of years, with the term for doing this dependent on your personal financial circumstances.

A mortgage can be held by an individual or jointly between one or more people, but if you do not keep up your repayments, your home could be repossessed by the lender.

Will I be accepted for a mortgage?

All mortgage lenders have their own criteria. The following factors all play a part in determining their mortgage offer and how much they are willing to lend to you:

  • Amount you wish to borrow
  • Size of your deposit
  • Employment status and income
  • Credit rating
  • Outgoings
  • Existing debt
  • Your age
  • Length of the mortgage term
  • Your credit status
  • If you are applying solely or jointly

In order to be accepted, you need to convince lenders that you are able to repay your mortgage. To do this, lenders typically use your credit report to check your repayment history. Your credit file will contain current and existing records on items such as credit cards, loans, overdrafts, mortgages, mobile phone/s, some utilities payments and all accounts opened in the past six years. If you have had arrears, defaults, CCJs, debt management plans or previously been made bankrupt, there are mortgage options available which we can help you with.

How does the mortgage application process work?

To get a mortgage, you will need to save a deposit of at least 5%. However, the more you can save, the better your rate will usually be. If you already own your own home, you can use the equity in your property for this. Our expert mortgage advisors can talk you through the benefits and the difference in your monthly payments by increasing your deposit.

Once you have found the property you want to buy, our mortgage brokers will assess your personal needs and circumstances and recommend a mortgage product that is right for you. They will compare hundreds of mortgage quotes, including a number of exclusive products that cannot be found on the high street or comparison sites, and ensure that you get the right deal at a great price.

If you are happy with the mortgage product your advisor recommends, you will pay an upfront fee to receive your Agreement in Principle (AIP). This will give you an approximate sum of how much the lender is willing to let you borrow, and enable you to put an offer in on your dream home.

If your offer is accepted, you will need to appoint a solicitor to handle searches, surveys and contracts, which we can arrange for you. We handle the entire mortgage application process through to completion, liaising with your solicitor and lender to ensure that your application is a success.

If you are looking to remortgage, then we recommend looking for a new mortgage deal around 3 months before your current deal expires. Starting early will give you plenty of time to compare all the available mortgage products and submit your application. If your mortgage is approved early there's no need to panic, as we will ensure that the completion date corresponds with your current deal's end date.

How much deposit will I need?

To buy a home with a mortgage, you will need to save a deposit of at least 5%. The more you can save, the better your mortgage rate will be. There are a few exceptions to this however as follows:

  • If you already own a home, you can use the equity from your property for the deposit
  • If you are a council tenant and are looking to buy your current home under the Right to Buy scheme, most mortgage lenders will now accept your Right to Buy discount as a deposit.

With property prices increasing, first time buyers are struggling to save enough money to buy a home. The government has therefore introduced 'Help to Buy' to enable first time buyers to get on the property ladder.

Our professional mortgage advisors are experts on all the various mortgage deals available and can help you decide which mortgage deal best fits your needs.

What are the associated costs with buying a house?

When buying a home, you will need to not only have enough money saved for your mortgage deposit, but also your mortgage fees, moving costs and legal expenses. We have compiled a handy list below of all the possible purchase and moving expenses you may have to pay, to help you with your budgeting. The exact fees and amount you will pay, is dependent on the value of the property you are buying and your chosen mortgage lender.

Mortgage booking fee: Some mortgage lenders will charge this to secure a fixed-rate or tracker deal.

Cost: £99 - £250

Mortgage arrangement fee: Some mortgage products will incur a mortgage arrangement fee, in addition to the mortgage booking fee. This fee is either paid upfront or added to your mortgage debt. If you chose to add it to your mortgage, the cost will increase over the lifetime of your mortgage.

Cost: £1,000 - £2,000

Telegraphic transfer fee: Needs to be paid to the lender to transfer the amount you are borrowing for the mortgage to the seller's solicitor.

Cost: £25 - £50

Mortgage broker fee: If you use a mortgage advisor to arrange your mortgage for you, you will need to pay a fee or commission, depending on the value of your mortgage.

Cost: £95 - £495. However, this may vary if you need to use a specialist lender

Valuation and survey fees: Charged by the lender to value the property you are buying. The cost varies according to which survey you choose:

Home condition survey: Most basic and cheapest of all the surveys and often used for new-builds.

Cost: £250

Homebuyer's report: More in-depth survey, assessing the inside and outside of the property, and also includes a valuation.

Cost: £400

Building survey: A complete survey generally used for older or unconventional properties. Although they are the most expensive, they are certainly worth considering, as it could potentially save you a lot of money if any structural problems are found with the property.

Cost: £600

Higher lending charge: Can be charged by lenders if you borrow most of the value of the property.

Cost: Approximately 1.5% of the amount you borrow

Searches: Your solicitor will arrange for the local authority to check whether there are any issues that could affect the property's value. The local council can charge a fee for carrying out these searches and may also request that a drains search be done at the same time.

Cost: £250 - £300

Legal costs: You will need to instruct a solicitor to carry out the necessary legal work for you.

Cost: £850 - £1,500 plus VAT

Stamp Duty Land Tax (SDLT): Charged on all purchases of UK land and property over £125,000. However, the amount you will pay is dependent on the purchase price of the property you are looking to buy, and whether you have owned a home before as follows:

First home: First-time buyers are exempt from paying SDLT on the first £300,000 of the purchase price of a property up to the value of £500,000. All purchases in excess of £500,000 will pay the standard stamp duty rates as follows:

  • £0 - £300,000: 0%
  • £300,001 - £500,000: 5%

Next home: If you are currently or have previously been a homeowner, you usually pay SDLT on increasing portions of the property price:

  • £0 - £125,000: 0%
  • £125,001 - £250,000: 2%
  • £250,001 - £925,000: 5%
  • £925,001 - £1.5 million: 10%
  • £1.5 million+: 12%

Second property: If you are looking to buy an additional property, you usually have to pay 3% on top of the normal SDLT rates as follows:

  • Less than £125,000: 3%
  • £125,001 - £250,000: 5%
  • £250,001 - £925,000: 8%
  • £925,001 - £1.5 million: 13%
  • £1.5 million+: 15%

For example, if you buy a next home for £275,000 the SDLT you owe is calculated as follows:

0% on the first £125,000 = £0

2% on the next £125,000 = £2,500

5% on the final £25,000 = £1,250

Total SDLT = £3,750

Information correct as of December 2017 - Source: www.gov.uk/stamp-duty-land-tax... costs: Paid to the removal firm (if you choose to use one) to pack, transport and deliver your possessions to your new home.

Cost: £300 - £600

What type of mortgage do I need?

For the majority of mortgages, you borrow money from a lender to buy a property and pay interest on the loan until you have paid it back. The only exception are interest-only loans. Here are the different types of mortgages available:

  • Repayment
  • Interest-only
  • Fixed rate
  • Variable rate
  • Tracker
  • Discounted rate
  • Capped rate
  • Cashback
  • Offset
  • 95%
  • Flexible
  • First time buyers
  • Buy to let

Repayment mortgages: Every month you make a payment which is calculated so that you pay off some of the capital you have borrowed, as well as the interest. By the end of your mortgage term, you would have repaid the entire loan.

**Interest-only mortgages: **Each month you pay only the interest on your mortgage and repay the capital at the end of your mortgage term. This option will not suit everyone, as you will need to guarantee that you can find the money when the time comes. If you don't, you risk having to sell your property to pay off the mortgage. Lenders can also insist that you provide evidence on how you intend to do this.

Fixed rate mortgages: Popular with first time buyers, as you know exactly how much you'll be paying each month for a particular length of time.

The disadvantages are that you may have to pay a higher rate if the interest rate falls, and a repayment charge if you either switch or pay off your mortgage before the end of the fixed term.

The lender will also automatically place you on a standard variable rate (SVR), which will probably have a higher interest rate, in which case you will need to apply for another fixed rate deal.

**Variable rate mortgages: **Also known as a Standard Variable Rate (SVR) and are every lender's basic mortgage. The interest rate fluctuates, but never above the Bank of England's base rate and is determined by your mortgage lender.

Tracker mortgages: Vary according to a nominated base rate, normally the Bank of England's, which you will pay a set interest rate above or below.

Discount rate mortgages: Some of the cheapest mortgages around but, as they are linked to the SVR, the rate will change according to the SVR and are only available for a fixed period of time.

Capped rate mortgages: A variable rate mortgage, but there is a limit on how much your interest rate can rise. However, as mortgage rates are generally low at present, many lenders are not offering them.

Cashback mortgages: Lenders typically give you a percentage of the loan back in cash. However, you need to look at the interest rate and any additional fees, as it is very likely that you will be able to find a better deal without cashback.

Offset mortgages: Combines your savings and mortgage together, by deducting the amount you have in your savings, meaning you only pay interest on the difference between the two. Using your savings to reduce your mortgage interest means you won't earn any interest on them, but you will also not pay tax, helping higher rate taxpayers.

95% mortgages: Generally for those with only a 5% deposit. However, as there is a risk that you may fall into negative equity if house prices go down, mortgage rates are usually high.

**Flexible mortgages: **Allow you to overpay when you can afford to. Other mortgages give you this option too, but you can also pay less at particular times or miss a few payments altogether if you have chosen to overpay. This does however come at a cost, as the mortgage rate will generally be higher than other mortgage deals.

First time buyers mortgages: All of the aforementioned mortgages are available to first time buyers, although some are more favourable than others. The government also offers a number of incentives for first time buyers through its help to buy scheme.

Buy to let mortgages: Enables you to purchase additional property for renting purposes only. The amount you can borrow is partially calculated on the rent payments you expect to receive.

How much does a mortgage cost?

The amount you pay each month is dependent on the total cost of your property and the type of mortgage you have. The costs you may need to pay vary but typically include:

Interest: Accrues across the lifetime of the mortgage and is charged as a percentage rate on the amount you owe.

Mortgage fees: A product fee which is charged for taking out the mortgage.

Application fees: Charged on application, regardless of whether you take out the mortgage.

Valuation fees: Can be charged by lenders for calculating how much your home is worth.

Higher lending charges: Can be applied to mortgages that have a small deposit.

**Telegraphic transfer fees: **Charged by the bank for arranging to transfer the money they are lending you (usually to your solicitor).

**Broker fees: **Often charged if you use a broker to arrange your mortgage.

**Early repayment charges: **Can be charged if you repay your mortgage before the end of the agreed term.

**Exit fees: **Lenders can charge these if you move to a new lender.

**Missed payments: **These can be charged by your lender if you fail to keep up your repayments, which can increase the total amount you owe.

Can I get a mortgage with bad credit?

If you have a history of bad credit including; arrears, defaults, county court judgements (CCJs), debt management plans or bankruptcy, there are still mortgage options available. Your choice of mortgage lender and type of mortgage will however be limited, and the rate of interest will be higher than someone who has a good credit rating. Our expert mortgage brokers are in regular contact with adverse mortgage lenders and are well placed to advise you on all your available options.

How long does it take to get a mortgage?

Getting a mortgage application approved is dependent on you, your mortgage broker, solicitor and lender. At CLS, we handle the entire process for you through to completion, communicating with your solicitor and lender, to remove the stress and hassle from you and ensure that your application is a success. Having all the relevant mortgage documentation to hand ready for your mortgage advisor, will also help speed up the process.

How does a bad credit mortgage work?

If you have bad credit, the mortgage options available to you are similar to standard mortgages. However, you will have to pay a higher rate of interest, and will likely need a larger deposit of around 15% or more. The more you can save however, the better your chances are of getting your mortgage application approved.

Mortgage lenders see those with poor credit as a risk, and therefore charge a higher rate of interest and request a bigger deposit to mitigate this.

If you have a history of bad credit or are worried about your finances, get in touch. Our mortgage advisors are experts in adverse mortgages and can advise you on your available options to help you get on the property ladder.

How do i know if I have bad credit?

Most people have a general idea about their credit rating. But, it's important to check your credit rating before you apply for a mortgage. In doing so, you will know whether you will need to apply for a standard or poor credit mortgage, and avoid having a rejected mortgage application appear on your report, which could affect your future credit chances. To obtain a copy of your credit report, sign up to either Experian, Noddle or Equifax.

How can i improve my poor credit rating?

To improve your bad credit rating, there are a few things you can do to possibly increase your chances of being approved for a bad credit mortgage:

  • Check that you are on the electoral roll
  • Always pay your bills on time and in full
  • Close any credit accounts you have for stores or catalogues and no longer use
  • Consider applying for a credit builder credit card, to help show lenders that you can manage money responsibly
  • Guarantor loans can also improve your credit score, if you keep on top of your repayments
  • Regularly check your credit report to make sure that all the information is correct. If any of the details are incorrect, contact the relevant lender and ask for these to be amended.

Making these changes should help improve your credit score, but it will not happen overnight, especially if you have a history of bad credit or have missed multiple payments.

Can I apply for a right to buy mortgage with bad credit?

If you have a history of bad credit including; missing a few credit card payments or County Court Judgements (CCJs), there are still mortgage options available, even if you have previously been turned down by a high street bank or building society.

There are mortgage lenders who specialise in providing mortgages to individuals with a poor credit history. Interest rates for bad credit mortgages are usually slightly higher than standard mortgages, as you are seen to be a higher risk. However, if you keep up your repayments, your credit rating should improve and allow you to move to a standard mortgage within a few years.

Our mortgage advisors regularly deal with bad credit mortgage lenders, and are well placed to find you the perfect right to buy mortgage to suit your individual needs.

Gemma May

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