Eight lenders offer adverse credit mortgages

You may feel that obtaining a mortgage with any adverse credit is now impossible but the launch of a new lender, Magellan Homeloans, has changed the current landscape.

Eight lenders offer adverse credit mortgages

As long as there have been no problems in the previous 12 months, they will accept applicants with a number of county court judgements (CCJ), defaults and even bankruptcies or individual voluntary arrangements (IVA).

This is excellent news, however you will pay some of the highest interest rates in the market at LIBOR (London Interbank Offered rate) + 8%, resulting in a current pay rate of 8.55%.

That got me thinking: 8.55% is an extremely high interest rate for those that may have experienced credit problems in the past but have since got their house in order.

Many people experience these problems for a host of differing reasons, illness, redundancy and divorce just too name a few but they should not feel that a lender such as Magellan Homeloans is the only viable solution.

Yes, there are numerous high street lenders that do not like to see adverse credit but all you need to do is shop around.

Halifax will consider a mortgage for someone with a satisfied CCJ, Virgin Money would not.

Barclays would also consider someone with a satisfied CCJ although it must not be within the past three years.

For those who have experienced worse problems such as an Individual Voluntary Arrangement or bankruptcy all is still not lost.

Barclays will consider someone who has been the subject of a Debt Relief Order or an IVA as long as the applicant has been discharged for at least six years at the date of submission of any mortgage.

Other lenders are more lenient still as Accord Mortgages will consider someone with a satisfied IVA over three years ago or a discharged bankrupt for the same period.

Skipton Building Society would also consider but after a period of four years.

The main problem is still likely to be getting through lenders’ credit scoring systems and whilst in theory the above are available it could still be difficult for many.

This is where you may find some of the smaller regional building societies more amenable.

Saffron Building Society will consider CCJs/defaults up to £1,000, Dudley Building Society will consider applicants with CCJs/defaults up to £2,500 and someone with an IVA satisfied more than three years ago. Buckingham Building Society will also consider applicants with an impaired credit history.

Finally, you may think that to obtain some of these mortgages you need a large deposit and for some you will but the likes of Accord Mortgage and Skipton Building Society may consider up to 85% or even 90% loan to values respectively.

Don’t think a lender such as Magellan Homeloans is your only route, it is definitely worth shopping around.

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Categories: News

About Author

Colin Payne

Colin Payne is a mortgage adviser at Chapelgate Associates

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  • Brien Peters

    i have tried so many times for a loan to complete my contract and buy off my friends house but i never got any. i have gone through so many lenders but all of them has always tossed me around with one thing and the other bad credit and lot more but a friend advised me to contact Mr. Baden which i did. He told me about swiftfinancials105@gmail.com and in less than two weeks i got my loan and did all i wanted to do. and the fun of it is that, i have 7 years to repay for this loan this is a hole lot of fun i would advise you to give him a try i am sure he would help you same way.

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  • Guest

    I have a CCJ from January (for a mortgage shortfall after the house was repossessed), and want to get a mortgage, I have a property to sell so will have a large percentage deposit around 50% but my mortgage broker says even with a large deposit I can’t get a mortgage, do you have any advise? Thanks

  • Cath Henshaw

    My son-in-law borrowed the 10% deposit and got a low interest mortgage deal from Halifax BS. He has not repaid the loan and is now being taken to court for the repayment of the £10,000 debt. When he gets a CCJ, will the building society give him another low interest mortgage product when his current one finishes this year? What intertest rate will he have to pay?

    • Aaron

      It is highly unlikely they will as this would constitute 100% borrowing which most lenders do not allow. They will therefore reject the application based upon the fact that your son-in-law was deceitful last time he made an application.

      Source: Qualified Mortgage Advisor

  • joshdcooper

    As Colin Payne correctly points out, borrowers with an adverse credit record do have a number of lenders to choose from, but it’s worth noting that not all adverse credit lenders are the same.With the exception of Magellan Homeloans, all are marketing ‘near prime’ or ‘light adverse’ mortgages. Magellan is the only lender which will consider borrowers with a heavy adverse credit record: it will consider CCJs up to any value and defaults and arrears provided the borrower has not missed any further payments in the past 12 months. It will also consider discharged bankrupts, IVAs and borrowers with debt management plans and debt relief orders. And we’ll lend to the self-employed with just 1 years’ trading record. Which is why Magellan charges a rate of 8.55% – because it will accept a greater risk than the rest of the market. When comparing adverse lenders in the adverse credit sector it’s important to compare like with like. At the moment, there is no direct comparison to Magellan because it’s the only lender willing to consider borrowers with a heavy adverse credit record.