Bad Credit Mortgages
Although the best deals on the market are aimed at people with pristine credit ratings and large amounts of equity or a large deposit, those with less than perfect credit histories can still get a mortgage.
Although 'sub prime' is now a famous euphemism, and we're unlikely to see a return to the days of easy credit for almost everyone, having some stains on your credit file will still not necessarily mean your application is rejected out of hand. What kinds of bad or adverse credit are there?
Defaults
This means that you have an unpaid debt on your record. It is unlikely that you will be able to get a mortgage if you have any significant defaults on your file, unless you have subsequently paid them off and they are marked as 'satisfied'.
CCJs
A CCJ is a County Court Judgement, and is an indication that a judge has ruled you liable for a debt you haven't paid. Again, having a CCJ on your file is going to make getting a mortgage difficult, but your chances are greatly improved if you have cleared the debt and your credit file reflects this. CCJs stay on your file for 6 years after being cleared.
IVA or Bankruptcy
If you have been declared insolvent either through a bankruptcy order or entering into an IVA (Individual Voluntary Arrangement) you are legally barred from taking out new credit until the bankruptcy has been discharged or the IVA period has come to an end. After this, you will be able to apply for a mortgage but will probably find it difficult to be approved for anything on halfway decent terms until sufficient time has lapsed for these stains on your credit record to be removed from your credit file.
Arrears
These are the least damaging of the entries on your file that we're covering. Being in arrears simply means that you've at some point been behind on your mortgage payments. If these arrears only lasted a short time and were fully cleared, they won't necessarily have a major impact on your mortgage application, especially if they were some time in the past.
That being said, in the current climate all mortgages are harder to come by, and so a history of arrears will at best probably mean you have to pay a higher interest rate or provide a more substantial deposit.
Site is for information only and does not constitute financial advice. E&OE.
Consult a mortgage advisor before taking any decisions.
