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How to get a mortgage if you have a bad credit rating?

Monday 14 January, 2019

Thomas Oliver’s Hertfordshire Mortgage Brokers and protection specialists, Vishal Gulrajani and Thomas Wheatley consider how to get a mortgage if you have a bad credit score.

Over the last five years our experience in the mortgage market has been that lenders are more open and more willing to look at a case that they may have previously not entertained. This is especially true with bad credit. As many of you are aware mortgage rates are at an all-time low, with more lenders in the market than ever before.  So no matter what your circumstances, there is often a mortgage solution. 

Vishal Gulrajani, Mortgage Broker in Goff’s Oak & Cheshunt, Hertfordshire said:

‘One thing I constantly here from clients is ‘I didn’t think that was possible’ or ‘I never thought I would have been accepted’. The interesting thing about those clients is that half of them didn’t even have bad credit but it comes as no shock to me that according to Which - 70% of potential clients don’t approach banks and other service providers due to fears that their financial circumstances mean they are automatically rejected.  First thing to note is that having a low credit score doesn’t always mean you have bad credit. A low score is often common in a young first time buyer as they are not likely to have any credit cards or loans, or if they do it will be very minimal.  Also they are unlikely to have any settled credit due to their age. Currently this type of clientele make up approximately 50% of the mortgage market business due to the reduction in investor mortgages.  Many young first time buyers are perfectly suited to get a mortgage, even with only a 5% deposit. Remember your score is dictated by the credit report company you are using e.g. Experian, so this is not the score the lenders use as they have their own internal scoring system.’

Thomas Wheatley, Mortgage Broker in Tottenham, North London said:

‘If you have missed payments, defaults, county court judgements (CCJ’s), individual voluntary agreements (IVA’s) or were even made bankrupt then don’t despair because a solution should still be available for you. Depending how bad your circumstance is and how much time has elapsed determines how many mortgage lenders are available and what mortgage rate you will be offered. Sometimes we can even approach your high street and get you the best rates that would be applicable to a client with supposed good credit, as lenders understand that some providers (especially telecommunications, gas and electricity) are very quick to put missed payments and defaults on your credit file even when it’s not your fault.’

Thomas Wheatley, member of the mortgage broking team at Thomas Oliver, Goff’s Oak, Hertfordshire continued: ‘Overall the mortgage market has got a lot better at understanding the reality of someone’s financial situation, hence there are more solutions available for anyone who thinks they may not be able to get a mortgage. It is important to speak to a mortgage broker and get mortgage advice before deciding if you can apply for a mortgage or not. Even if you are currently not applicable for a mortgage I always give my clients a solution on how to improve their credit.  For example going on the electoral roll or using low percentage limits of your credit card may improve your credit rating so you can apply for a mortgage six to twelve months later. ‘      

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