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.
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.
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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.
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.
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.
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.
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:
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?
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.