Mortgages & Loans to make the whole family smile

You are considered to have ‘bad credit’ when financial mistakes recorded on your credit report affect your ability to get credit. For example, you could have an adverse credit history caused by missed payments, defaults or County Court Judgements.

Each negative marker can reduce your credit score and prevent you from getting the best deal. At 1st UK Mortgages, we have access to a wide range of Specialist Lenders who will pay more attention to your ability to pay in the future than to mistakes made in the past.

1st UK Mortgages is an excellent example of a bad credit mortgage broker with many years of experience.

Why would I remortgage my home?

There are two main reasons you would refinance your home; the first and most common is your existing discounted term, or fixed rate term has run out, and you’re on an unfavourable rate. The second reason is that you need to raise money.

Getting a better deal

• The discounted term has ended
• Fixed rate has run out, and you want the security of another fixed rate
• Your credit history has improved, and you can access a lender with better rates
• Your employment or self-employment has changed significantly, allowing you to qualify with better mortgage companies
• You want a flexible mortgage
• You want to move from an interest-only mortgage to a repayment mortgage
• You or your partners individual voluntary arrangements have completed
• Your current lender has sold its mortgage book to a 3rd party, and you have an incentive to leave them
• You want to pay off your second mortgage and get a larger loan
• Your property price appreciation has made the best deals with a different lender achievable
• You have come into a large sum of money, and you want to pay your mortgage down

Remortgages for releasing equity

• Purchase of a car, motor home, boat or motorcycle
• Funding for a dream holiday of a lifetime
• Purchasing another property, such as a Buy-to-Let or second property
• Buy property overseas for rental or holiday use
• Raising capital for a loved one’s new home purchase
• Supporting private school fees or paying for a son or daughter to go to university/college
• Funding home improvements kitchens, bathrooms, etc
• Renovating your home
• Necessary repairs not covered by buildings insurance
• Building a new conservatory
• Debt consolidation (credit cards, personal loans or other unsecured borrowings)
• Funding for a new business venture or franchise or expanding an existing business
• Funding for lawyers bills to fight civil or criminal prosecution
• Funding for private surgical procedures not covered by the NHS, for example, cosmetic surgery
• Paying for private life-saving medical treatment not offered by the National Health Service or short-cutting their waiting times
• Pay for drug or alcohol rehab for yourself or other family members

Is there an alternative to remortgaging that works in 2023?

If you already have a first-charge lender on your home still offering you an excellent rate (a loan underwritten when you had excellent credit), you may be much better off getting a secured loan.

A homeowner loan with bad credit will allow you to keep the discounted rate from your existing lender and release equity with the help of a second charge.

Personal reasons

• Getting Married or being in a Civil Partnership
• Divorce or Separation – release equity to pay off a previous partner as part of the divorce settlement to keep the family home
• One party named on existing mortgage and property title subject to insolvency or bankruptcy
• You are at an age where you want to extend the term of your mortgage as much as possible (remortgage before you’re a certain age)
• If you have an investment property you decide to move into yourself, you need to refinance away from the buy to let mortgage into an owner-occupier mortgage to avoid breaking lenders terms and conditions

A mortgage broker for bad credit can help you apply for the right mortgage and not apply for mortgages you will not be approved for.

Lenders are wary of getting involved with some types of properties. For example, a property with a thatched roof, one with an outbuilding on the land, or a property that’d be difficult or maybe even expensive to get building insurance on. Those can present higher risks to lenders.

Therefore, you could not always be rejected but rather the place you want to secure your loan against. Mortgages are tied to your property, so if that’s flooded or starts to crumble, the value of the home will decrease, and so too will the amount of the loan secured against it. Therefore, there’s a higher risk to the lender.

About lenders and risk levels?

For home lenders, they need to be able to make sure their business is profitable. They can’t do that solely on 90% to 100% LTV deals, as there’s a very low-profit margin. If someone on a high LTV defaults, it’s unlikely that repossessing and selling the home will even cover the costs let alone turn a profit. For that reason, lenders are looking for diversity. They have some customers on high LTV, but to diversify, they need customers on a lower LTV to decrease their risk across their portfolio.In other words, they need people who have an adverse credit history.

To find decent deals, even those for poor credit, you must know about the Loan-to-Value Ratio. UK lenders use it to determine how much they’re prepared to lend you and will learn how much of a deposit you will need for any product.

• The LTV ratio is merely the difference between the value of your property and the amount you’re looking to borrow.
• The higher the LTV is, the higher the risk is to the lender.
• LTV ratios range from 100% to 60%. Most products will be no more than an 85% LTV, with 70% being considered reasonable.
• If you are looking at remortgage lenders, the LTV requirements are often the same as for property purchases.

Getting a mortgage with adverse credit could involve a mortgage application to mortgage lenders, not high street lenders. When you apply for a mortgage, you can expect higher interest rates, and you may need the help of a mortgage broker who is authorised and regulated by the financial conduct authority.

The broker could advise you to go to a check my credit website before the mortgage application. A county court judgement could reduce your bad credit mortgage options and other credit problems.

A home buyer has plenty of poor credit mortgage options depending on the deposit size they can put down. There are many more mortgage deals with larger deposits for people who want to buy with smaller loan payments.

Sensible use of a credit builder credit card for several months before the application could help to show a history of no late payments.

Your home may be repossessed if repayments on your mortgage are missed or paid late. It’s crucial you can afford to pay the loan, and your employment status and credit rating should be maintained.

A low or below market value purchase price may help a building society or other specialist lender from the mortgage advice bureau make a favourable lending decision.

A debt management plan, multiple ccjs or IVA could seriously impact your ability to climb the property ladder. The worse your credit score is, the more likely the broker will want to charge a fee. The factors on your credit reports could guide eligibility with certain banks. A mortgage calculator could be a great guide to your applications.

3rd party agencies like Experian, Call Credit and Equifax, show IVAS as well as other records that lenders.

The higher you can deposit, the less risk you pose to lenders. Therefore, aim for no less than 15% deposit. To increase your chances of being accepted, consider increasing your deposit to 30% or more if you can. The more you can put down as a deposit, the less of a risk the lender is being asked to take on.

Someone with a good credit history would be able to access deals with 90% to 100% LTV. With bad credit, prospective lenders offers are going to be below 85% LTV, although applying for a 70% LTV will increase your likelihood of being accepted.

If your credit history is really poor, there will still be options worth exploring, but you can expect it to increase the amount of deposit you’ll need, based on your level of risk to lenders.

As adverse mortgages aren’t a specific product, you’ll need to tweak your search so that you’re looking for 70% LTV or below. This will limit the number of lenders offering above 70% LTV, which you’d more than likely not be suited for.

As an example, if you’re looking to purchase a home loan for a property value of £225’000, you’d be looking to borrow £168,750, which is a 70% LTV home loan. If you’ve only a few minor issues with your credit report, you could look for 85% LTV. Just tweak the amounts to your search criteria.

To find out which is a good fit for you, you’re best to consider the amount you can comfortably afford to put down as a deposit, as well as the amount you can comfortably afford to repay each month, as that will be determined by the interest rate you’re offered.

Products to search include:

• Fixed
• Discounted Variable Rate
• Libor or Bank Base Rate Tracker
• For lower Loan to Value, some lenders may do Interest Only

For those with a poor credit history, perhaps because of financial difficulties in the past, which has now changed and you have a good income, it won’t matter. The fact that you have a good income coming in now doesn’t deflect the issue that you’ve defaulted on previous loans and credit agreements.

The truth will remain that there are issues on your credit files showing that you have a history of defaulting, paying late, or not paying at all. That raises concerns with lenders and increases your risk level.

Your risk level will always be given more weight than the amount of income you have.

Most people are baffled when they think about an application, but it’s not complicated. The first thing to do is find out what’s on your credit report. Then, it’s all about making you as credit-worthy as possible.

These are the frequently raised questions for adverse credit mortgage product:

• Are new lender mortgage products the key to getting the right deal?
• How many lenders offer bad credit mortgages?
• What if I am declared bankrupt?
• Is a mainstream bank a non-starter for my circumstances?
• Will having a guarantor help me find the right lender?

A guarantor is considered security because someone else is willing to take on the responsibility of making the payments if you don’t.

The realistic answer is yes, you can, but it’s not advisable. You’d be putting someone else’s home up as collateral and, therefore, at risk should you default on your home loan repayments.

A more attractive option is to consider using other assets. It could be that you have a vehicle that could be sold, and you can downgrade to release some capital to raise your deposit amount. Or you could have other assets such as investments, savings, or perhaps securities like home equity in another property you lease as a landlord.

Investments can also be used and put up as collateral, but more than anything, they show lenders that you’re responsible with money, and if you need to back out of the deal, you have other ways of paying for the monthly payments, without requiring selling the property for the full market price. The housing market is not consistent price-wise. What your home’s worth now will change years from now. So if you’re taking on a five-year fixed term, the loan amount may be higher or lower at the end of the fixed-term period.

Because of the housing price fluctuation and your current position of adverse credit, it’s unlikely worth you tying into a five-year deal. You only need a long enough mortgage deal for you to do some repair work to your credit files. Two years should be sufficient. By the end of the two-year agreement, provided you’ve taken steps to boost your credit score, there’s no reason you can’t be eligible for a better remortgage offer.

Your income will be considered, too. The rules and regulations surrounding these products are strict. This is because these are the financial products that caused the global financial crisis. Too many loans were made for residential and commercial properties before the financial crash, which pushed up house prices. House prices rose faster than annual salaries, and eventually, people couldn’t afford the repayments. For a while, they could still borrow, though. In the financial sector, there’s an entire market devoted to people with a bad credit history. It’s called the subprime market.

Subprime mortgages and subprime-backed loans were the primary cause of the financial meltdown on a global scale. For that reason, lenders allow borrowing of 3x your annual salary now, although 4x your salary is possible, albeit riskier. Five times your salary will only be considered when you have a high salary coming in, for which you’ll be paying a hefty chunk towards the repayments.

Disposable income is also something to consider. If you can consolidate debts to free up monthly revenue that could go towards your mortgage repayments, then do that. The more disposable income you have, the higher a monthly payment you can make, and depending on how you go about it, you could find that consolidating debts into what’s considered a bad credit loan could give you some extra capital to put down on the initial deposit, thus lowering your LTV ratio and making you more attractive to lenders.

How do I go about fixing my credit rating?

This is something that requires a long-term approach. You need to start right away though. No more missed payments on any of your accounts, because they will be entered into your credit files with Experian, Equifax and Call Credit. Keep up your repayments on all accounts, including your utility bills, any mobile contracts, subscription services (inc. TV).

As soon as you find yourself beginning to struggle financially, assess your financial situation and get rid of any paid subscriptions that you do not need. Like your subscription TV or a premium phone contract that can be switched to PAYG.

Or if you’re out of the contract period for any service you have, like phone, Internet, TV, or premium banking services – consider cancelling, and if that’s not an option, then switching to a more attractable deal.

There are some services that, when you apply for them, will credit score you. Utility companies do this if you’re asking for a credit meter to be installed to replace a PAYG meter, and so will the majority of companies offering any type of contract.

They’ll want to assess your risk to ensure you can keep up repayments for the duration of the contract.

There are financial products available designed to help you repair your credit. Or even build it. Young people who have never had credit will have a problem getting approved for a first-time mortgage just because the lender has no data to use for risk assessment. If that’s the case, then some credit history needs to be developed.

A good first step is to get yourself onto the credit radar. A prepaid credit card is one of the fastest ways of doing that. There’s no credit check required as there is with mainstream cards. So, if you lack credit history details, don’t go to mass market lenders if you know you’ve little or no credit history for them to check. One option that is open to you is to use a prepaid card with the Credit-Builder Add-On. It won’t fix bad credit but build your positive credit history by reporting that your account is held in good standing. Provided you keep in good standing anyway.

Fixing your credit rating is all about getting credit approved and then maintaining your accounts without defaulting. Getting credit approved is about approaching lenders with as little risk potential as possible. A mobile phone contract of £10 to £15 per month over a 12-month term is more likely to be approved than applying for a car on hire purchase. More accounts held in good standing and more recently than previous files reported for defaults will improve how your file looks to potential lenders. The idea is to make you look like a responsible borrower and good at money management.

The better your credit file shows you managing your finances, the better your credit score will be and the more attractive you’ll be to lenders.

The electoral register

You need to be on this to improve any chance of obtaining credit, as it proves you’re a UK citizen. You can go https://www.gov.uk/register-to-vote and, as the link says, Register to Vote. If you believe you’re already registered, then at least check your details are accurate. You may have moved your address and recorded your old information while your other accounts, like your bank, have updated details. Check that your details are correct on the Electoral Roll, and if you’re not on it, then register yourself.

At 1st UK we understand how lenders assess risk levels. We work with various financial institutions, brokers, and specialist remortgaging firms. Still, most notably for you – we know the level of risk our partners are comfortable with.

Therefore, we’re in a tremendous position to help you by telling you straight what your risk level will be assessed as and the best type of product, designed for customers with adverse credit ratings and help you grab the best deal on the best possible terms.

What we offer:

• Access to the Top UK Lenders for remortgages and mortgages
• An extensive range of Specialist Lending Products to suit most circumstances
• Thousands of different Mortgages that a typical bad credit mortgage broker may not have access to
• Free, impartial advice (no obligation)
• Almost all credit histories catered for as we have a comprehensive subprime mortgage lenders list UK
• Switch your mortgage
• Top Lenders Searched
• Arrears, CCJ’s in some cases OK
• Fully CeMAP qualified brokers
• Assured confidentiality
• Nationwide Service for bad credit mortgage lenders
• We search the market for you!

1st UK Money Bad Credit Mortgage Broker

With over ten years of experience 1st UK has a massive subprime mortgage lender list, and one thing that’s been learned is the best mortgage lenders for bad credit often changes, and the good ones sometimes run out of money to lend. An example of a great adverse credit mortgage broker is one who rings up the underwriting team of an adverse credit mortgage lender they know and sounds them out on a case before even an application has been filled in.

1st UK has a subprime mortgage lenders list that is likely much longer than other mortgage brokers for bad credit. Their lender relationships are so strong that some bad credit mortgage lenders can give us access to new products before they are officially launched.

You may have spoken to other bad credit mortgage brokers who made many promises about getting you a subprime mortgage, but they refused to ask you the tough questions about your income and your credit history.

Adverse mortgage lenders have particular criteria where they care a lot about some things and don’t care much about other things.  The way to fit you into a deal from our list of mortgage lenders for bad credit is to find out every bit of relevant information – even if you think the questions are a bit silly. There is no such thing as a guaranteed mortgage with bad credit, as all poor credit mortgage lenders care a lot about your income.

Another thing a good mortgage broker for bad credit will always ask you is if you have a new partner that could go on the mortgage application. Their income and potentially better credit rating may make a significant difference to your mortgage applications and the type of sub prime mortgage lender that will accept you.

Our staff work 9 am till 9 pm, seven days a week. Between those times, we’re on hand to offer you a free, no-obligation advisory service for home-owner loans, including bad credit mortgages and remortgages. A mortgage is probably the most significant financial commitment you will ever make; that’s why we offer a free no-obligation quotation service. If you are happy to proceed with us, once you have reviewed your quotation, then we will help you complete the application from start to finish.

Remember, with thousands of UK Lenders; it represents a daunting task for you, which is why we strongly recommend getting in touch for a free one-to-one consultation. Our brokers are there to take the mystery and chance element out of finding the right option for you. Remember, we can often help where others fail. All enquiries are completely confidential, and you are under absolutely no obligation to proceed at any time. We charge no upfront fees at all, unlike some of our competitors, offer a nationwide service and are happy to talk to you at a time to suit you.

1st UK Money bad credit mortgage brokers – specialist mortgage broker

If you’ve got yourself in a mess with missed credit card payments and got some form of poor credit rating, you may think the bad credit mortgage rates you are offered will may your mortgage payments not affordable.

The good news is that the lending criteria of many low credit score lenders and mortgage providers will lend at interest rates close to the main high street bank as long as they are confident about your ability to pay.

Adverse credit mortgages from specialist bad credit lenders can be as little as 1% higher interest than other mainstream lenders.

The main problem with your adverse credit issues is mortgage arrears. Before a mortgage adviser lets you put an application into some bad credit lenders, they will strongly advise you clear your mortgage arrears.

As another example, first time buyers can go to the best mortgage broker with some historical bad credit from some unsecured finance agreements and get a good deal from many lenders as long as they have a good deposit and good personal income.

As a lender uses one credit reference agency and there are three main credit reference agencies, your credit record and credit issues may be different with different lenders; this is where the choice of adverse credit mortgages is crucial.  Some people may indeed have to pay higher interest rates, but using the debt to income ratio will ensure your outstanding debts are serviced.

Fixed rate mortgages and variable rate mortgage options are still available to people that are bad credit applicants.  The residential mortgage process can happen quickly with direct deals as long as all your credit agreement details are disclosed early.

People in debt management plans with poor credit scores are more difficult to get a mortgage application approved as it’s not just the overall credit score. It’s the fact a 3rd party is managing the existing debt.

Most lenders in the UK mortgage market will take a view on missed credit card bills, late payments and other multiple credit issues.  The main problem is people want to apply to most high street lenders, but this is usually the wrong lender; niche lenders are much more likely to help people with difficult financial circumstances.

You may need to set aside time for your bad credit mortgage work, as the mortgage cost will be much lower if you get the paperwork together at an early stage.  How much deposit you have available can be key to your mortgage approval and in-depth knowledge of the eligibility criteria and mortgage application process.  The UK regulatory regime will help make sure your mortgage debt is not too big as well as all the specialist brokers in the marketplace.

A bad credit rating for a fixed period?

If you have some bad credit that is nearly 6 years old which is still contributing to your low credit rating, your mortgage advisor may suggest you can get a good mortgage deal by waiting for the defaulted credit accounts to disappear from your credit profile.

Your choice of bad credit mortgage broker can be helped by looking for willing ones to offer a no-obligation chat and don’t talk about an upfront fee.  If you can get money from family for a higher deposit, the will make the problems with income multiples and stable income less challenging.  There is no one product fits all. Your mortgage offer will come from being assessed on a case by case basis.

What if my bank statements show financial commitments to multiple lenders at uncompetitive interest rates?

It’s never good to see people constantly using other lenders that have caused a credit issue like the dreaded payday loans mafia.  The repayment history lenders tend to see as relevant and sometimes concerning.  If a few payments missed had resulted in you going to a debt management provider, some standard mortgages lender criteria will be outside your reach.

What about getting a mortgage while in an individual voluntary arrangement (or IVA)?

In short, you need a secured finance specialist and a niche lender. The best lenders with a fixed rate will turn you down.  Your individual voluntary agreement will severely impact the mortgage product you can qualify for as most mortgage terms and other eligibility criteria make borrowing impossible.  It may help if you can get a family member with their own home to be a guarantor for the non standard mortgage or home loan.  It’s even more difficult if you want a large loan with a small deposit, and the chances that you can realistically afford the high risk new mortgage, even with a gifted deposit, is still low.

Specialist Advice for a compelling bad credit mortgage application

1st UK money has an in-depth knowledge of specialist mortgage providers as fewer lenders accept less than perfect credit checks. Maybe you’re a first time buyer with a less than good credit rating because of the credit crunch that wants to borrow money for a new flat or house.

The last thing you want to do is make multiple mortgage applications. You need all the past credit issues, including paying bills late, county court judgements, defaulted car finance or even past bankruptcy discharge all disclosed upfront.

Because you are putting a deposit down, you don’t want your property repossessed. You want to pass the affordability checks, get a bigger deposit and get your home purchase right the first time with the lowest monthly repayments.

People with bad credit can also forget about moving costs and additional fees, so it’s important to get the correct legal information and the right advice. Traditional building societies may not be willing to help these home movers.

One of the problems is that you may need to act fast as lenders cap the funds they lend, and the lender’s criteria that suits you may stop lending.  To improve your chances of getting a favourable deal, you should be willing to pay a broker fee and get on the property ladder sooner.