Adverse Credit Mortgages

It won’t surprise you to hear that adverse credit mortgages or mortgages for those with bad credit are not as widely available as they are for those with exemplary credit histories. Fortunately, there are enough lenders out there willing to consider that not everyone has a 5-star credit rating.

So what are your options if you have a credit history of missed credit card and CCJs?

Contrary to popular myth you can still get a mortgage even if you have bad credit and, in some cases, even if you have been declared bankrupt in the past. However, finding a lender willing to take a risk is much easier if you use the services of a specialist whole of market mortgage broker.

Advantages of using a whole of market mortgage broker

The advantage of using a mortgage broker like us is you have access to more than 140 lenders and while not all of them are willing to consider applicants with bad credit, at least some will and they will even specialise in this sector.
The table below can be used as a rough guide to your chances of getting a mortgage with adverse credit. The table shows that getting a mortgage is possible in as little as 12 months following CCJs, defaults or repossessions.

Up to 12 Months 1-2 Years 2-3 Years 3-4 Years 4+ Years
CCJs no possible yes yes yes
Defaults no possible possible yes yes
Reposessessions no possibly with a big deposit possibly with a big deposit yes yes
Bankrupt no possible possible possible yes

While the table provides a brief overview everyone’s individual circumstances are different. For example, a person could be declared bankrupt and win the lottery a year later in which case the bank might look on this individual differently when they apply for a mortgage.

Will I pay more for a mortgage with adverse credit?

This is a common question for applicants and this really depends on the lender. Logic dictates that lenders will charge what the market rate is and unfortunately for those with adverse credit, the competition for your business is not going to be as hot as it is for those with good credit records.

That said, a whole of market mortgage broker will be able to open up access to the best rates available and you may be surprised to find out what is available.

Speak to our experts today about getting a mortgage with adverse credit

If you can afford to wait and begin the process of cleaning up your credit file, then this is always going to make getting a mortgage easier. If on the other hand you have your heart set on buying a property and are looking for ways to qualify despite having adverse credit speak to one of our advisors today.

What Is An Adverse Credit Mortgage?

Adverse credit​ (also known as bad credit) is when you have a less-than-perfect history of repaying debt or credit commitments. You can get bad credit for a variety of reasons, including ​missing bill payments​, ​county court judgements (CCJs)​ and individual voluntary arrangements (IVAs)​.

Having bad credit can make it tougher than normal to get a ​mortgage​. However, it’s still possible to secure a mortgage if you have bad credit. Many lenders offer ​adverse credit mortgages​, which are specifically designed for people with bad credit. They’re more popular than you might think, ​making up a third of the current mortgage market​.

Plus, not all bad credit carries the same weight. A missed utility bill is less damaging than a CCJ, for example. It all depends on the amount of money involved and how much time has passed. Not sure whether you have good or bad credit? You can check your credit score through organisations like ​Experian​ and ​ClearScore​.

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Why Might You Need An Adverse Credit Mortgage?

As its name suggests, an adverse credit mortgage is a specific mortgage catered to those who have a poor credit score. You can accumulate bad credit for a number of reasons, which might not always be your own fault.

You might need an adverse credit mortgage if you’ve had any of the following:

    • Defaults​ — This is where you fail to meet a payment on time, for example a utility bill, a credit card or a personal loan. If you miss consecutive payments over a certain length of time, the company you owe money to will most likely close your account. Missing a mortgage payment is generally viewed as the worst type of default. A default stays on your credit history for 6 years, regardless of whether you repay it. However, it always disappears after the 6 years are up, even if you still owe money.
    • County court judgments (CCJs)​ — A CCJ will be registered against you if you fail to repay a debt that you owe, and other attempts to recover the money (like a warning letter or default notice) have been exhausted. If you don’t pay off a CCJ in full within 30 days, it’ll stay on your credit history for 6 years.
    • Individual voluntary arrangements (IVAs)​ — This is a legal agreement between you and your creditors, outlining an affordable repayment plan — either monthly payments, a lump sum or a combination of both. The money goes directly to an ​insolvency practitioner​, who distributes the money to your creditors. Often used as an alternative to bankruptcy. An IVA will stay on your credit file for 6 years.
    • Bankruptcy — This is a declaration that you can’t reasonably pay back your unsecured debts (usually at least £5,000). A trustee will take over your situation, meaning you’ll no longer be chased by your creditors, and most of your assets will be sold in order to raise money to pay off your debts. You can’t apply for a mortgage while in the process of bankruptcy, but it’s possible for you to get a mortgage after bankruptcy.


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How To Improve Your Chances Of Securing A Mortgage With Adverse Credit

While adverse credit mortgages are available to those who have bad credit, they don’t offer the best interest rates. Thankfully, there are certain steps you can take to get access to more competitive rates by making yourself more attractive to mortgage lenders.

    • Give it time. Certain credit issues are seen as less serious over time.
    • Wait until you have a higher or more stable income.
    • Buy with a partner who has good credit.
    • Improve your credit score​. Develop a history of consistent payments and responsible credit usage.
    • Put down a larger deposit. The bigger your deposit, the lower your loan-to-value ratio​, which lowers the risk for lenders. As a result, you’ll get access to more competitive interest rates.
    • Limit your number of credit applications in the run up to applying for a mortgage.
    • Keep your ​credit utilization ratio​ low (under 20%). This figure represents how much credit you’re using compared to how much credit is available to you.
    • Make sure you’re on the electoral roll.
    • Be honest and ready to explain your financial situation.
    • If you have bad credit, it’s possible for you to ​remortgage​. However, we strongly recommend speaking to one of our expert mortgage brokers before making a decision.


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How We Can Help If You’re Looking For An Adverse Credit Mortgage

Not every mortgage lender views adverse credit the same way. Some big-name banks on the high street might not offer you adverse credit mortgages or reject you altogether. Every time you get rejected for mortgage, it appears on your record and will bring down your credit score. So it’s important that you seek expert advice before applying for a mortgage.

Huxley Mortgage Services​ are mortgage brokers in Cheshire with access to over 140 lenders and can offer you a wide range of adverse credit mortgages. Our team of friendly, professional and experienced mortgage advisors will help you find the best deal to suit your individual circumstances while guiding you through the entire process.

If you’re looking for an adverse credit mortgage in Chester, ​get in touch with us​ today.

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