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.

Equity Release on Credit Mortgages

It can be hard to be approved by a lender for other finance options too when you have a bad credit rating. If you’re struggling to make monthly credit card payments, for example, a lender will consider that when weighing up your ability to make monthly loan repayments. As equity release doesn’t involve monthly repayments, your credit card debts aren’t an issue.

Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.
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