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Bad Credit Mortgages

Bad Credit Mortgages

Category: Mortgages

Updated: 23/05/2017
First Published: 11/10/2006

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Some mortgage lenders offer mortgages for people with credit problems. These are known as credit impaired mortgages or sub-prime mortgages. When applying for a mortgage the lender will check your credit history. If your credit history is judged to be poor some lenders may not offer you a mortgage. Other lenders may be willing to lend to you but often the rates for bad credit mortgages are higher than standard mortgages.

There are a number of lenders who offer credit-impaired mortgages so it is worth shopping around for the best deal. The mortgage search can help. Simply check the tick box that asks if you have any adverse credit to see what deals are available.

Bad credit mortgages - factors that will affect your credit history include:

  • County Court Judgements (CCJs)
  • Mortgage arrears or payment difficulties
  • Bankruptcy.

Bad Credit Mortgages Based on County Court Judgements (CCJs)

These are court orders made against you if you have defaulted on money owed or debts. These are orders that will insist you repay the creditor. If you do not repay the debt within one month it will be recorded on the Register of County Court Judgements for six years. If you repay the full amount of the debt after a month this can be marked as 'satisfied', and although it will remain on the register, anyone searching your credit record can see that it has been repaid.

CCJs will affect your credit rating and will reduce the number of mortgages open to you.

Bad Credit Mortgages Based on Mortgage Arrears or Payment Difficulties

This means that you have fallen behind on mortgage repayments because you are unable to meet the repayment amounts. Again, this will influence a lender's decision to give you a mortgage.

If you are currently struggling with your mortgage repayments, you should contact your lender for help and advice. Often they can help by:

  • Offering advice on how to budget for your repayments;
  • Only charging you for the interest on your repayments for a period of time;
  • Offering you a payment holiday;
  • Increase the term of your mortgage to reduce your monthly repayments;
  • Reducing the amount you repay for a period of time.

Bad Credit Mortgages Based on Bankruptcy

Bankruptcy can be used as a way of clearing debts that you cannot repay. You should consider alternatives and ensure you fully understand what bankruptcy means before choosing it as an option. Although part of your debts is usually written off, your property and possessions along with excess income are used to repay your debts this could mean repossession of your home.

Bankruptcy usually lasts for a year. After this you may be 'discharged' even if you still owe money. Discharge is not automatic and does not necessarily free you from all liabilities, so further assets may be seized. Debts arising from fraud, certain crimes and fines are unlikely to be ever written off. Once again your credit rating and so borrowing options will be affected.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.