Vincent Burch Mortgage Services has experience in supporting adverse credit remortgages, and we may be able to help you find a suitable deal. It may take longer than a standard mortgage application to find the right lender, but once you have made contact, the process is typically similar to that of any other applicant. The key is to not rush into an application, just because you think you’ve found a lender. Speak to a specialist adverse credit mortgage broker, such as Vincent Burch Mortgage Services, who knows the market and has previous experience helping people in your situation.
Adverse Credit
Buy To Let Mortgages
Many potential landlords believe that an impaired credit rating will put an end to their chances of securing a buy to let mortgage. However, while this may be true for those mainstream lenders using a credit score led underwriting process, the availability of specialist adverse or “bad credit” mortgages is on the rise and could be the answer you’re looking for.
Can I get a Buy to Let mortgage with bad credit?
Don’t let the prospect of an adverse credit rating stop you from pursuing your buy to let investment, whether as a limited company or individual.
What Is Adverse Credit?
Adverse credit, or alternatively known as ‘bad credit’, is a negative mark on your credit history which can make it tricky to borrow money, for loans, credit cards, and even mortgages. It can be caused by a poor repayment history on credit such as credit cards, loans, or other financial commitments like your household bills. Similarly, if you have little to no credit history, you can be affected too.
Adverse credit can also be caused by mistakes, such as an incorrect home address. Each adverse item can affect your credit history differently, with bankruptcy having a larger effect than late payments. Similarly, late payments in turn have a larger effect than too many credit applications.
Adverse credit, or a poor credit history, can make it more difficult to get approved for a mortgage, or unsecured credit. However, specific mortgage lenders tailor products to those with an adverse credit history, so you may still be able to get on the property ladder.
How do I know if I have adverse credit?
Credit history will always be part of the financial equation, so it pays to know your credit score and check that it accurately reflects your current circumstances.
Credit reference agencies such as Experian, Equifax and TransUnion will calculate your score for free, giving an indication of how the financial world will view you. It’s an opportunity to correct any errors and consider other simple ways to ensure your credit score is as robust as possible, such as:
- Registering to vote – this is used to confirm personal details
- Limiting new credit card applications – rejections impact your credit rating
- Allowing credit history to mature – create a financial pattern with the same card
- Setting up direct debits – avoid missing a bill payment by mistake
Taking these steps can help to improve your score, but how do you secure a buy to let mortgage if the numbers still don’t add up?
Securing a mortgage with adverse credit may be more challenging, but it’s far from impossible. By ensuring that you are actively working on improving your creditworthiness, you can increase your chances of obtaining the mortgage you need.
Whether you’re looking to purchase a new home, remortgage your current property, or invest in an HMO, there are options available to help you achieve your property goals despite adverse credit.
Can I Get an HMO Mortgage with Adverse Credit?
Obtaining an HMO mortgage with adverse credit can be more challenging than a standard residential mortgage, as HMOs are considered higher-risk investments. Here are some considerations if you’re looking to secure an HMO mortgage with adverse credit:
- Specialist HMO Lenders:
Seek out specialist HMO lenders who are experienced in working with investors who have adverse credit as they may have more flexible criteria.
- Higher Deposit:
Be prepared to provide a larger deposit, which can reduce the lender’s perceived risk. Having a higher deposit upfront can make you a more attractive borrower.
- Experienced Mortgage Broker:
Speaking to a mortgage broker with expertise in HMOs and adverse credit cases is essential as they can navigate the complexities of HMO lending and match you with the right lender.
- Prove Rental Income:
Emphasise the potential rental income from the HMO property, as this can offset the perceived risk of adverse credit. For example, if your mortgage payments are £1000 per month, but you can evidence that you will receive £2000 per month on the rental income, this may work in your favour.
How can I get an adverse credit buy to let mortgage?
An adverse credit history may make it more difficult to find a mortgage, however it may still be possible. There’s a number of ways you can work towards successfully securing a mortgage despite your poor credit history.
1
Improve your credit score
This can take a little bit of time, but working to clean up your credit history by paying your bills on time and in full can go a long way. It also makes sense to keep an eye on your credit report, and check in regularly, and closing any unused accounts. Asking family or friends to act as a guarantor may be beneficial too.
2
Show you are a responsible borrower
Lenders may want to see more evidence you can afford to pay a mortgage, such as payslips and bank statements. You can also try to reduce your costs and keep your monthly outgoings consistent.
3
Consider a specialist lender
Some lenders can be a little bit more flexible than others, and consider applicants who have previously faced financial problems or have complex incomes. It is also beneficial to seek the support of a mortgage broker, like Vincent Burch Mortgage Services, who can search a wider market.
Can I Get a Mortgage Through My Limited Company If I Have Bad Credit?
Mortgages through Limited Companies, also known as Buy to Let Limited Company Mortgages, have become increasingly popular among property investors. If you have adverse credit and are considering this option, here’s what you should know:
Limited Company Structure:
When applying for a mortgage through your Limited Company, the lender primarily assesses the company’s creditworthiness rather than your own personal credit. Having a Limited Company with a solid financial track record can work in your favour.
Specialised Limited Company Lenders:
Seek out lenders who offer mortgages to Limited Companies; these lenders may have more lenient criteria, especially for established companies with strong financial records.
Demonstrate Financial Stability:
Ensure that your Limited Company’s finances are in good order and that you are up to date on all payments/invoices. Lenders will want to see that the company is generating income and managing its expenses effectively.
Adverse Credit Mortgage Broker Expertise:
Just as with other mortgages, having an experienced mortgage broker is crucial. They can guide you through the process and identify lenders that may be more amenable to your situation.
When it comes to bad credit mortgages our lenders understand the importance of the big picture
Financial history and adverse credit
There’s growing recognition that an adverse credit rating doesn’t always give a complete picture of an individual’s or limited company’s financial behaviour and credit worthiness.
Lender assessments
Some lenders have changed the way they assess risk to cater for those who don’t fit a strict credit-score led approach. These products, known as impaired or adverse credit mortgages, with specialist criteria are typically only available through independent brokers such as Vincent Burch Mortgage Services with access to competitive rates not available on the high street.
Looking at types of bad credit
There are many reasons, both business and personal, that may contribute to an adverse credit rating. From county court judgements (CCJs), bankruptcy or missed payments on bills, credit cards and loans to incorrect personal details and financial links with someone you’re no longer associated with. Looking beyond the credit score before deciding on an applicant’s financial wellbeing is where impaired credit mortgages differ from other buy to let products. Lenders have recognised that this type of finance often needs to be considered on a case by case basis.
Mortgage Director Vincent Burch offers this key piece of advice
As well as your typical outgoings, you must ensure all previous adverse, missed payments, defaults, CCJs no matter what it is, or how small, is reported to your broker at the start of the enquiry process. Having the full picture from the beginning will enable your mortgage broker to set reasonable expectations. This will mean that time isn’t wasted with lenders whose criteria you cannot meet, or worse, failed applications due to a lender uncovering information that wasn’t reported to them at the start.
Adverse Credit Remortgages
It is possible to remortgage a property with a bad credit history, however it may take longer to find the right lender. Mortgage lenders typically take into consideration your current financial situation and credit report, and may want to ensure you are a responsible borrower.
For example, they may ask you about any current monthly repayments, how much of your property you have paid off so far, and how your repayments impact your overall budget. They may also require additional security, such as a guarantor, who agrees to pay off the remaining balance of the mortgage if you can’t.
Tips for remortgaging with bad credit
1
Prepare
Stay up-to-date with your monthly repayments and be ready to follow strict budgets and guidelines
2
Consider specialist lenders
These lenders may be more flexible than high street banks.
3
Expect higher interest rates
Lenders may offer bad credit remortgages with higher interest rates in order to offset the risk.
Find the Best Adverse Mortgage for Your Buy to Let Property
Why Choose Vincent Burch As Your Adverse Credit Mortgage Specialist
The best way to find the right impaired credit mortgage for your specific set of circumstances is to speak to a mortgage broker. Be open and honest about your financial history and any financial concerns you have from the outset and take advantage of the knowledge and advice they can offer. A broker won’t judge, they will only try to help you.
At Vincent Burch Mortgage Services we take a flexible, tailored approach and have access to those lenders who offer specialist mortgages at competitive rates only through an intermediary. You won’t find impaired credit buy to let mortgages on the high street.
Whether for a limited company, HMO or individual buy to let property, we’ll work with you closely to find the best solution for those landlords with an impaired credit rating. Don’t let your buy to let business plans drift, talk to our expert team today and we’ll get some clarity on the reality of your financial situation. Whether you are in London or Liverpool our team operate throughout the UK to service your needs.
For expert adverse credit mortgage advice, call 01603 340644 or email [email protected]
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