With bad debt, is it still possible to obtain a mortgage?
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andrea65
1 year ago
Expert Financial Adviser Answer
John Stirling
answered 1 year ago
Sometimes.
It depends on the bad debt, a bankruptcy, county court judgement (CCJ), Individual Voluntary Arrangement (IVA), or serious default will all make life very tricky. Late payments or small defaults or CCJ are significant problems, but provided they are isolated incidents some lenders will still take a chance on you.
Generally if it is possible to get a mortgage, it will be more expensive, and require a larger deposit than would otherwise be the case.
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It depends on the bad debt, a bankruptcy, county court judgement (CCJ), Individual Voluntary Arrangement (IVA), or serious default will all make life very tricky. Late payments or small defaults or CCJ are significant problems, but provided they are isolated incidents some lenders will still take a chance on you.
Generally if it is possible to get a mortgage, it will be more expensive, and require a larger deposit than would otherwise be the case.
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
yes it is possible but the rates will be higher.
it will very much depend on the nature of the bad debt. if its a couple of missed payments that happened a year ago - some lenders will disregard as long as you are up to date now but some lenders wont touch you for 3 years!
the best thing is to get a copy of your credit file, you can get a free trial from www.creditexpert.co.uk you give card details to start with the registration as you pay per month after 30 days but if you havent used the service before and cancel before the first 30 days are up, its free.
this will give you a simple traffic light report on your file, green is good, amber is a caution, and red is bad.
its worth checking out what is registered so that you can check that the information on file is correct as it has been known for lenders to make mistakes and where you can prove that they have, they must correct them within a specific period of time.
finishing back on the mortgage front you should definitely get in touch with a specialist IFA such as myself or someone else on here (?) to establish your needs and to determine what level of deposit your lender might need as its likely to be a higher amount than someone with a clean credit file.
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it will very much depend on the nature of the bad debt. if its a couple of missed payments that happened a year ago - some lenders will disregard as long as you are up to date now but some lenders wont touch you for 3 years!
the best thing is to get a copy of your credit file, you can get a free trial from www.creditexpert.co.uk you give card details to start with the registration as you pay per month after 30 days but if you havent used the service before and cancel before the first 30 days are up, its free.
this will give you a simple traffic light report on your file, green is good, amber is a caution, and red is bad.
its worth checking out what is registered so that you can check that the information on file is correct as it has been known for lenders to make mistakes and where you can prove that they have, they must correct them within a specific period of time.
finishing back on the mortgage front you should definitely get in touch with a specialist IFA such as myself or someone else on here (?) to establish your needs and to determine what level of deposit your lender might need as its likely to be a higher amount than someone with a clean credit file.
Expert Financial Adviser Answer
Dr David Carter FPFS
answered 1 year ago
It will also depend upon when that bad debt happened, and to some extent why. Take heed of Darren's advice and speak to an IFA such as Darren (I'm afraid that I tend to steer away from this kind of work!) and present your credit file to him to consider - he will be able to approach potential lenders on your behalf, anonymously, to see whether they may be able to consider an approach from you.
One thing NOT to do is to go straight to a lender who you think might be good for you (for example, you know that they have given a mortgage to someone else who was in a similar position). All lenders have their own criteria, and some are more flexible than others, and it is important not to try applications that stand a high chance of failure: a few credit searches by mortgage companies will further damage your prospects.
Finally, if all else fails, your IFA should be able to advise you when it may be worth trying again (for example, perhaps after the second anniversary of a satisfied (ie paid off) CCJ), and whether there are any immediate steps you can take to help things along. It goes without saying, really, that it is vital that you keep on top of your various credit commitments from now on.
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One thing NOT to do is to go straight to a lender who you think might be good for you (for example, you know that they have given a mortgage to someone else who was in a similar position). All lenders have their own criteria, and some are more flexible than others, and it is important not to try applications that stand a high chance of failure: a few credit searches by mortgage companies will further damage your prospects.
Finally, if all else fails, your IFA should be able to advise you when it may be worth trying again (for example, perhaps after the second anniversary of a satisfied (ie paid off) CCJ), and whether there are any immediate steps you can take to help things along. It goes without saying, really, that it is vital that you keep on top of your various credit commitments from now on.
Expert Financial Adviser Answer
Paul Ross DipPFS CII(MP&ER)
answered 1 year ago
It is, but very difficult in this climate. Most lenders are very cautious, since the credit crunch, and have "priced" in risk. My advice is save yourself the trouble of finding the mortgage for yourself and speak to a mortgage broker or independent financial adviser, who will be able to research the best deal for you, probably through their research system Trigold or Mortgage Brain
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