If you think issues with missed payments, county court judgments (CCJs), or even bankruptcy will keep you from getting a mortgage, think again – new Which one? An analysis revealed that there are currently over 1,600 mortgage deals available for people with bad credit.
Which? analyzed nearly 5,000 residential mortgage offers available to first-time buyers, people looking to move and those paying down, and found that 33% will consider someone who has had credit problems in the past.
More than 30% of the market will consider you if you’ve had a CCJ, while more than one in 10 deals are available to people who have gone bankrupt, according to our analysis of Moneyfacts data.
Each agreement that accepts people with bad credit has its own criteria – and those who have had credit problems in the past could be charged higher interest rates or be asked to provide larger mortgage deposits. But this year, it seems there are plenty of options for people to get a mortgage even if they’ve had credit issues.
Mortgages for bad credit – how many offers are available?
Our analysis revealed that of the 4,921 mortgage transactions currently available on the market, 1,662 will consider someone with credit issues.
The vast majority of these transactions are fixed-rate, fixed-term mortgages – 88% in total – with terms between two and five years.
But a word of warning to first buyers who only have a small deposit and who have had credit problems in the past: our analysis suggests that only 137 (only 8% of) offers are available for those with a 5% or 10% deposit.
The most common maximum loan-to-value (LTV) ratio is 75%, which means there is more choice for those with at least a 25% deposit.
Mortgages after CCJs
A County court judgment (CCJ) is issued if you do not pay the money you owe and most other reasonable means of recovering the money – letters, defaults, late payment notices – have been ignored and exhausted.
The good news is that the vast majority (1,498) of bad credit deals accept people who have had a CCJ, although there are strict conditions.
There are 108 offers available for people who have had a CCJ in the last year, and no more than three in the last three years. But the CCJ cannot be more than £250.
Some 287s allow you to have a CCJ up to £500, while 248s allow you to have CCJs worth £1,000 or more.
Even if you’ve had a CCJ in the past year, there’s still hope of getting a mortgage – 164 offers are available for those who haven’t had a CCJ in the six months prior to the demand.
A satisfied court decision – which has been paid, resolved or settled – is viewed more favorably. A settled CCJ disappears from your credit report after six years, and there are plenty of lenders ready to take you on if it does.
Learn more in our guide to get a mortgage with the CCJs.
Mortgages after an IVA
An Individual Voluntary Agreement, or IVA, is a contract between a person in debt and the company they owe money to, which can sometimes help avoid bankruptcy.
If you can’t afford to pay your debts in full, an IVA allows you to make an agreement with the companies you owe money to to freeze the interest you pay and possibly reduce the amount you owe to an affordable level. .
Our analysis shows that there are 591 offers available to people who have had IVAs – but in the vast majority of cases your IVA must be completed and your debt settled. There are only two offers available for those with open IVAs.
The more time that has passed since your IVA was completed, the more choices you have. There are only 11 offers available for those who settled a year ago, and six for those who completed an IVA two years ago.
Waiting three years after your IVA ended seems like a good time, as the number of offers available increases to 112. But you’ll have a lot more choice if six or more years have passed since your IVA ended – 387 offers are available for people in this situation.
Mortgages after bankruptcy
Bankruptcy is the process of canceling all your debts, with your assets being sold to pay your debts.
You cannot apply for a mortgage while you are still bankrupt. Your bankruptcy ends once you receive a notice of discharge – normally 12 months after the date the bankruptcy order was made, although this may vary depending on the terms you were given at your bankruptcy hearing. bankruptcy.
There are a surprisingly large number of deals available to people who have gone through this process – 670, or 13% of all mortgage deals available on the market.
Just like people who have had an IVA, the number of offers available for those who have recently been discharged from bankruptcy is low. There are only 23 offers available for people who have been released within the past two years.
The number of transactions increases to 150 three years after the exit of the company; 51 require at least four years to elapse; 13 after five years.
But the majority of offers (350) are available to people who have been discharged from bankruptcy for at least six years.
How to get a mortgage with bad credit
They’ll want to see proof that you’ve been responsible for repayments since your previous problems, paying your bills and other debts on time.
It is really important that you take steps to strengthen your credit score – such as ensuring you are registered to vote, limiting credit applications in the run-up to applying for a mortgage, and keeping the amount of credit you use to less than 20% of your overall limit.
Have a large mortgage deposit will make it easier: there is less risk for the lender if you own a large part of your property and fall behind in your payments in the future, because they will have a better chance of recovering the loan they give you granted.
Find out more in our guide to mortgages for bad credit.