Mortgages for people with poor credit – they are available

Mortgages for people with poor credit

Has the global recession left you with a few blips in your credit rating? If so, you are not alone. And the good news is that there are lenders out there who recognise a few credit blips may not mean that you are a bad payer. There are options available for ‘subprime’ borrowing.

It must be said, that if you are currently experiencing difficulty making payments to your mortgage, loans and credit cards on time, then there is little chance of getting a new mortgage. However, if your problems are in the past and you have a clean run of two years or more, there are lenders offering competitive rates who will consider lending.

This includes previous mortgage arrears, defaults and CCJ’s.

Thought you could not get a mortgage?

The press paint a very dim picture of the real position. There are lenders lending to people with poor credit. The key is to be able to show a lender that the difficulties are in the past. And if you are now conducting your credit accounts properly and paying on time, you may be considered for a new mortgage or remortgage.

What will a lender expect to see?

Typically, lenders will expect to see a clear run for two years, with no missed mortgage payments or late payments on loans. They will also want to see that you are in stable employment, or if self-employed, that at least the last years accounts demonstrate that you can afford the mortgage. Whatever the case, you will need to have firm proof of income. Some lenders in this field will consider lending based on commission income and other variables, such as overtime and bonus, as well as basic income. This may help meet affordability.

What Loan to Value is available?

It is highly unlikely that if you have any poor credit recorded on your credit file within the last 6 years that you will be able to get a mortgage for more than 85% loan to value. If your credit file shows good conduct for the past 2 years, you may be able to get a loan for 80% loan to value and at 75% there should be more choice available.

This means that if you are buying, you ideally need a 20-25% deposit and if looking to remortgage, you need 20-25% equity in your property.

What sort of rate can you get?

We can only give you an idea based on the current market, correct at time of publishing this blog, 21st November 2012.

At 75% Loan to Value, Kensington Mortgage Corporation has a 3.44% fixed rate mortgage available. (The overall cost for comparison is 4.4% APR)

Early repayment charges apply to this mortgage, which is 3% of the balance borrowed during the fixed rate period (Two years).

This mortgage is available in England & Wales with a maximum loan of £1million. The loan size available will depend on how much you can prove is affordable for you to repay.

This mortgage deal has a £999 arrangement fee that can be added to the loan and for remortgages they offer a free valuation fee.

What other fees may apply to this mortgage deal?

Harvey Bowes mortgages will charge a broker fee for this type mortgage. Our fee will always be quoted up front and will depend on the amount of work we need to do to make your application successful. Typically, this fee is £600 or 1% of the balance borrowed, whichever is higher.

Is this the only deal available?

Not at all. There are a range of lenders offering mortgages for those with a poor credit history in the past. Kensington, Aldermore and Igroup are the better named mortgage lenders offering poor credit mortgages, however, there are more lenders operating in this market.

If you would like to know more about poor credit mortgages, please call Howard or Rachel, in confidence, on 029 2115 6918.

Your home may be repossessed if you do not keep repayments on your mortgage

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About harveybowes
Mortgage Broker and founding Director of Harvey Bowes Limited. A mortgage broking practice with bases in Cardiff & Poole, UK. We take a fresh and positive approach to mortgage broking which pays dividends for both our clients and frankly, ourselves. The team at Harvey Bowes are expert advisors in all aspects of mortgages from residential to commercial and buy to let.

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