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What are Adverse Credit Mortgages?
Mortgages can seem a little confusing at first, add the term 'bad credit' or 'adverse credit' and things can seem incredibly daunting. Here we aim to help you understand what an adverse credit mortgage is.
A mortgage is much like any other credit agreement, you agree to borrow monies (the mortgage) and pay the mortgage back over a set period of time. Adverse credit mortgage applications are no different, however they cater for borrowers who would be unlikely to get approved for a mortgage with a high street lender die to having bad credit listed on their credit file/
People who can not get a mortgage through the usual channels (banks or building societies) may still be able to borrow money, even if their credit history is complicated. A 'bad credit' mortgage is no different to any other mortgage - it simply describes the basis under which the mortgage is offered which may be different to the norm, for example a normal or high street mortgage won't allow CCJ's but an adverse credit mortgage would.
Adverse Credit Mortgages, which lenders offer mortgages
There are lenders who will allow you to submit a mortgage application even if you have a number of credit issues, for example, you may have missed loan repayments, defaults, CCJ's or an Individual Voluntary Arrangement (IVA) - you may be in a debt management program or you may have been discharged from bankruptcy. The truth is that all lenders, including adverse credit lenders have their own criteria for assessing a borrowers credit worthiness and different ways of determining whether they would accept you as a client, so you may still be able to obtain a mortgage regardless of how bad you think your credit history is. The main difference with an adverse credit mortgage lender is that should the lender decide to offer you a mortgage, the interest rate may be slightly higher than a standard high street mortgage.
How do I know if a mortgage with adverse credit is right for me?
It's easy to get confused when applying for a mortgage, especially if you have been turned down by your own bank or building society. A bad credit mortgage may be right, they are typically aimed at people who:
- Have been refused a mortgage elsewhere
- Have a poor credit history
- Have a low credit score
- Have CCJ's or default's etc listed on their credit file
If you can answer yes to any of the above it is likely a bad credit mortgage is right for you, however the best way to find out if a bad credit mortgage is best suited to your needs is to speak to a professional adverse credit mortgage broker who can assess your financial and personal situation and, after obtaining all the relevant facts from yourself should be able to offer impartial, confidential advice tailored to your specific needs.
With the correct information and a few comparable products you should then be able to make an informed decision as to what's best for you and your family.
Can I get an adverse credit mortgage myself?
One of the major differences between a height street lender and a sub prime or adverse lender is that they do not deal directly with the public.
What that means is whilst you could just walk into your local bank and enquire about a mortgage, if you need to use a lender that allows impaired credit you will typically use a mortgage broker.
