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- Mortgage Advisor, MD
There is no doubt that in the current financial market obtaining a mortgage has never been more difficult. That’s why we believe getting the help from experienced mortgage brokers is absolutely essential.
A knowledgeable broker will understand your circumstances and, more importantly, will understand the very latest lending rules from a wide range of mortgage lenders. They are best placed to match you with a suitable lender for your circumstances.
It may well be that at the time of your enquiry it is impossible for you to obtain a mortgage but the broker will help you prepare yourself to be able to find a mortgage as soon as possible. They will discuss with you how you can repair your credit over a period of time for example. Or if you have just turned self-employed for example, they will help you to understand how you can best prepare your affairs to make you more of an attractive proposition to a mortgage lender in the future. The fully qualified advisers we work with have years of experience arranging all sorts of mortgages, and will help you to have the best chance of obtaining a mortgage either now or in the future.
The following topics are covered below...
Just because you’ve had issues in the past, doesn’t mean you can’t get a mortgage in the future. It is true that many lenders have strict criteria, and need applicants to pass a credit score for which they have the bar set very high, so any amount of problems in the past can result in a decline. BUT, the good news is there are more and more mortgages available for people with a difficult credit history. It’s not as easy as it was however, in the height of the housing boom, adverse credit mortgage lenders were a-plenty and despite a big default or a bankruptcy, it was still possible to borrow on a mortgage at a relatively competitive rate.
Now, the market has changed and things aren’t as straightforward, in part due to most of these lenders running out of money to lend, and in part down to the remaining lenders being tighter and choosier with the little money they do have available to lend out. Regulation from the Financial Conduct Authority has also prompted such lenders to be more thorough with their underwriting and approval strategies.
But, because of this, there is still a huge gap in the market for adverse lenders rich or brave enough to take advantage of it, and in the last year we have seen a rise in lenders such as Aldermore and Kensington lending again, and more recently new lenders joining the fun such as Magellan and Kent Reliance. The advisers we work with are bad credit mortgage specialists and have the knowledge of the whole market to find a mortgage for you where others can’t. Fill out an enquiry or give us a call and see what can be done today.
Generally, the more equity you have the more chance you’ll have of finding a mortgage. An applicant looking for a £250,000 mortgage, when the house is worth £277,000 has only approximately 10% equity, which is not the most attractive proposition to a lender even if the applicant has good credit. The good news is, there are still reputable lenders out there, sympathetic to different situations, so it’s vital you find an experienced broker who knows the whole market, as they’ll have a good idea of which lenders will consider your application before you get started.
You can read our guide to improving your credit rating here.
TOP TIP: One of the best things you can do to increase your credit score is to obtain an adverse specific credit card, and spend and repay in full on a monthly basis – this helps to prove you can borrow and live within your means at the same time, and you’ll notice your score improve over the coming weeks and months. There are 2 options here, the first is a standard credit card specifically for those with bad credit, the second is for those who are declined for standard cards and need a guaranteed-acceptance card (usually if you have had more severe and more recent adverse credit). Most people opt for the Aqua card first, then go for the CashPlus if declined.
the Card by Aqua here
or the MasterCard Cashplus Gold Activeplus HERE…
Having an idea of which lenders will help first is paramount, because doing pointless credit searches with lenders that clearly won’t offer a mortgage, can have a negative effect. However, in order to secure the mortgage, it will depend on an initial application being made and the lender making an assessment, so although it may fit on paper, nothing is guaranteed until it is agreed in principle.
Read our article on credit scoring for more info.
Yes, it’s possible to get a mortgage on benefits.
If you claim benefits or your main source of income comes from benefits, this shouldn’t prevent you from getting a mortgage. If you are disabled, you may be able to get additional housing cost payments. If you’re eligible to receive income support, income-based jobseeker’s allowance or pension credit, you may even be able to get help with mortgage interest payments.
Although many lenders will not accept any form of state or employer benefit towards your income when assessing a mortgage application, there are other lenders who are more understanding when it comes to benefits.
A whole-of-market broker, like those we work with, will know which lenders will accept benefit income when it comes to getting your mortgage arranged. Make an enquiry for a free, no obligation chat and we’ll connect you with a broker who has experience of helping customers in similar circumstances.
Every lender does things differently, and each occupies a different corner of the market, so it’s important to bear in mind if you’ve been declined with one lender, don’t give up. Some lenders specialise in buy to lets, some with alternative property types, and some take a more flexible view with self-employed applicants. View our specialist self-employed mortgages page.
If you are self-employed but struggle from a lack of accounts or are struggling to prove your income, visit our self employed mortgages with one years accounts page for more information on how to find a mortgage if you’ve only been trading for one year.
This is one of the most common questions for most people buying or re-mortgaging, and it really depends on your income and commitments. The general rule is about 4x your salary. ‘Salary’ is a fluid concept in and of itself however, as every lender looks at income differently. Some accept state benefits, overtime, shift allowance, bonuses, holiday pay, dividends, investment income and retirement income, and some even offer UK mortgages based on overseas income… and others don’t. Some take 3x joint salaries, some can stretch to 5 times in the right circumstances. Again, your best bet is to give us a call so we can calculate what would work out right for you.
See our mortgage calculator or use our online search engine, to input your details and give you an idea of what you can borrow, different products you’re likely to be eligible for, and what your monthly repayments will be.
In the UK currently, most lenders require a minimum deposit of 10% and, in the right circumstances 5% with some specialists and others that offer Help to Buy. How you obtain one, however, is another matter. As discussed below in the 100% mortgages section of this page, shared ownership mortgages are often a good way to get a mortgage without any deposit. Read on below to find out more.
The other option for those who have a good credit history and sufficient income, is to purchase with a 5 or 10% deposit by borrowing it on an unsecured loan, and then taking the mortgage for the further 90-95%. This is a very unique proposition and there;s currently only one lender in the market that considers it, so get in touch today and one of the advisors we work with will establish if you’re eligible.
Personal savings and family gifts are the main sources people get their deposit from. Those with their money tied up other properties sometimes have difficulty in getting a mortgage because they don’t have the money to put down. Certain lenders will allow you to take a charge on other properties or assets you own as security. Click live chat or give us a call and speak to one of the experienced advisers today to find out how.
Certain lenders accept that you won’t always have this money saved and ready to put into a mortgage straight away. The house buying process is such that once you’ve found a house you like and had an offer accepted, arranging the mortgage, getting the legal process finished (searches and contracts drawn up etc), it can take up to 2 months sometimes longer. Your deposit is the last thing they require after all the work is done, when you wire it to the solicitor and then complete and get given the keys a day or two later. This should give you time to save a little extra if you’ve found that dream home and don’t yet have all the money ready.
At the moment, 100% standard mortgages don’t exist. Sometimes there are also ways we can minimise the amount of deposit you’ll need to put down, and other 5% deposit mortgages available. As mentioned above, there is currently 1 lender that offers a package that is practically 100% borrowing, as a borrower with decent credit score and sufficient income can borrow 5 or 10% on an unsecured loan and the further 90-95% on a mortgage. If you want to see if you are eligible for this then get in touch and one of the specialists we work with will check for you.
Yes. As of about the middle of 2011, 5% deposit mortgages came back onto the market. Since the roll out of Help to Buy schemes 1 and 2, 95% mortgages for new builds and now general property on the open market and much more readily available. A good credit score and clean history are usually very important although there is one lender who will consider up to 95% if you have adverse credit over 3 years ago, with a clean file since.
There are signs that Help to Buy might end up being brought to an early end and, therefore, if you are struggling for a significant deposit you might want to take advantage of it now whilst you still can. Fill out an application form now to see whether or not you are eligible. On of the advisers will provide you with a clear idea of what you are likely to be repaying and how affordable such a mortgage might be, and if there’s no mortgage available now, they’ll help you make the changes you need to be eligible ASAP.
Have you ever considered getting a shared-ownership mortgage? Shared ownership mortgages can be obtained at 100% LTV with the 100% being your share of the property. The rates will typically be higher due to the lack of deposit but one of the advisors will be able to give you a clear indication of what your repayments rates are likely to be. Get in touch with us to find out more.
10% mortgages are far more common than 5% mortgages, and because of the lower risk many more lenders are active in this market. Help to Buy has seen a recent surge in products however and there are a growing number of lenders bringing out 95% deals. Remember though, generally speaking lower deposits mean stricter lending criteria, so acceptance can be much more difficult as credit score pass rates are set far higher. If you are declined at 95% due to credit score, another lender may consider you eligible, and if you cant get a 95% deal it is always worth looking at the 90% options – often borrowers fit into that bracket and getting hold of the additional 5% is sometimes preferred to walking away.
If you’re ready to make an enquiry please fill out our quick form below and a mortgage expert will be in touch ASAP. If you require immediate assistance please give us a call.
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About the author
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!
Mortgage Advisor, MD
*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.
Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
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