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Having a poor credit history can make it more difficult to get a mortgage, but if you have the money and can afford to take on the payments, there could be a deal out there for you.
It’s normal to have questions about how these types of mortgages work and how suitable they may be for you, and we cover all the basics you need to know.
If you have an adverse credit history, it may be possible to get a mortgage using a broker who can connect you with a specialist lender.
Before applying for a bad credit mortgage, check that you:
A good place to start is to check your eligibility. You can do this by speaking to a member of our team who can help get you started, or you can request a free quote here. This part of the process will not have any effect on your credit score.
You will have access to the same remortgage products as those with good credit. These tend to be:
Depending on your financial circumstances, your options may be limited compared to someone who has a stronger credit background and interest rates will also likely be higher.
Which type of mortgage is best for me?
Everyone’s needs are different, so deciding on the best remortgage product depends on your circumstances at the time of applying.
You can use the following as a rough guideline to give you an idea of what could work:
You can speak with a member of the Willows team to get a better idea of your options and the type of mortgage products that are available to you.
We work with specialist lenders that offer interest-only mortgages to people with adverse credit histories.
If you take out an interest-only mortgage, this means that each month you will only pay interest on the total amount you have borrowed.
Once the mortgage term has finished, you can either repay the full amount you initially borrowed or remortgage.
Applicants that are eligible for this type of loan will need to tell the lender how they intend to repay the loan at the end of the term.
While interest-only mortgages cannot be used for debt consolidation, we may have alternative products that can help you to manage your existing debts.
How are subprime mortgages different from standard mortgages?
The main difference between these types of mortgages is that subprime products are typically offered to people with low credit scores.
While they can vary, subprimes usually tend to have higher interest rates and specific terms depending on the applicants’ credit history.
If you come across terms like “bad credit mortgages” or “adverse credit mortgages” whilst doing your research, these are also usually considered to be the same as subprime mortgages.
Getting a quote won’t affect your credit score
Lenders will generally apply higher rates of interest to mortgages that are taken out by people with bad credit.
It is important to ensure you can afford to take on the repayments before you agree to a new mortgage. Defaulting on the loan could put your home at risk of repossession.
As long as you continue to maintain your monthly repayments and no new adverse credit events are added to your credit report, you stand a good chance of being able to repair your credit rating over time.
How can I compare mortgage deals if I have bad credit?
If you have a less than perfect credit history, it makes sense to compare the different options that are on the market.
Working with an established broker can make this task easier to manage, as they can compare hundreds of deals to find the best one suited to your current credit status.
It’s important to note that the lowest rate isn’t always the most suitable. For example, a longer fixed-rate term might offer a lower rate, but it could come with higher early repayment charges if you intend to move home soon.
At Willows, we take time to understand your situation so we can match you with the most suitable mortgage. We guide you through the process from start to finish to help you find an option that works with your finances.
The type of fees you will have to pay for a bad credit mortgage are the same as a standard mortgage. These include a:
Lenders tend to charge higher fees for bad credit mortgage deals to protect themselves against the possibility of the borrower defaulting.
When you apply for a mortgage through our brokerage service, we’ll ensure you are aware of all the associated costs involved, so you always know where you stand.
When you notify a current mortgage provider that you wish to remortgage, many will offer a product transfer before the current deal expires.
This will allow you to switch to a new rate without moving to a Standard Variable Rate (SVR) which is usually higher.
If you’re with a high street lender and your credit profile has declined since you took out your mortgage, we recommend reviewing the product transfer options available to you. These are often more competitive if you intend to keep the mortgage on a like-for-like basis and do not require additional borrowing.
To get a broader idea of your options, you can also speak with us to discuss your situation and to see if there are any other suitable mortgage deals.
Every lender’s criteria is different, but most generally ask you to submit:
Some lenders may ask for additional information and documents, depending on your employment and/or your credit status.
Your income can play a role in determining the type of rates you can access, although its level of impact depends on a few different factors.
For example, if you are newly self-employed or receive our income in a foreign currency, this can limit the number of lenders that would be open to accepting your application.
To get a better idea of how your income affects your application, get in touch with the Willows team and we’ll be happy to answer any questions you may have.
Lenders are likely to ask you to provide explanations about any bad credit events that are on your credit file.
As long as you can provide honest and reasonable explanations, this can help your chances of being approved.
This is especially true for applications that require a manual referral, as the more information we can provide to the lender, the more beneficial it can be for you.
For example, if we ask clients A and B to explain missed payments:
We would feel more comfortable and confident referring Client A to the lender and would expect a more positive outcome compared to Client B.
If you are unsure about remortgaging your home, you could look at the pros and cons of taking out a secured loan.
They are also referred to as second-charge mortgages, and you will need to use your home as security against the loan.
Where remortgaging replaces your existing mortgage, runs alongside your current mortgage. If you are unable to maintain the repayments on a secured loan, the lender could sell your home to recover the debt.
Pros of a secured loan
Cons of a secured loan
To get a better idea of the mortgages you may be eligible for, speaking with an experienced broker can make all the difference.
Willows work with a panel of established specialist lenders that accept mortgage applications from people with adverse credit backgrounds.
To find out more about how we can help, you can speak with a member of our team today by calling 01656 766 158.
If you have a question – we’d be happy to talk to you – simply call us…
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At Willows Finance we ensure your personal information is kept secure and confidential.
PRIVACY OF YOUR INFORMATION
At Willows Finance Ltd, we appreciate that your privacy is extremely important to you. With this in mind, we have put in place a number of measures to ensure that any personal details we obtain from you as a result of visiting this website is processed and maintained in accordance with accepted principles of good information handling and also in accordance with the Data Protection Act 1988.
This statement provides you with details of the type of information we may hold about you, how we obtain and use information and how we protect your privacy.
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Authorised and regulated by the Financial Conduct Authority
Firm Reference Number: 670052
Company Number: 6678545 (Registered in England and Wales)
This document outlines the services we provide. If you need clarification, please contact us at 01656 766158.
We offer first and second charge regulated mortgage contracts for business or personal use.
Other finance options may include:
Regulatory Status:
We offer an advised mortgage broking service and provide enough information for you to make an informed decision.
We are not independent financial advisers. Free debt advice is available from the Money Advice Service.
You can view our privacy policy at: https://willowsfinance.co.uk/privacy-cookie-policy/.
Lenders may also have their own privacy policies which will be provided to you.
We charge a broker fee upon loan completion. The average fee is approximately 5%, depending on your situation.
Fee details:
No refund is offered after completion. You may pay upfront or add the fee to your mortgage. Fees and commission will be detailed in your ESIS and Mortgage Agreement.
You will receive a Mortgage Agreement and an ESIS document detailing:
You may cancel your application anytime before completion without any charge. Mortgages cannot be cancelled after completion.
Missing payments can lead to charges, repossession, and negative impacts on your credit rating.
Consolidating debt may result in higher long-term interest. Securing debt against your home increases risk.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it.
If you wish to complain, contact us at:
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Tel: 01656 766158
You may be able to refer your complaint to the Financial Ombudsman Service.
We are covered by the FSCS. You may be eligible for compensation of up to £85,000 per person per firm for mortgage advice and arranging.
More info: www.fscs.org.uk
After processing your application, you’ll receive a Mortgage Agreement and have a 7-day reflection period.
Contact us during this period with any questions. To proceed, sign and return the agreement.
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