The Client
Our client wanted to remortgage his primary residence, which was currently mortgage-free. He needed to raise funds to buy a new vehicle and to help send his daughter to university.
The Scenario
The client had already approached several other brokers, none of whom were able to help him. He had recently missed several mortgage and unsecured loan payments over the previous 12 months, giving him what is known as adverse, or bad, credit.
Most lenders will decline a mortgage application outright if there have been any missed mortgage payments within the last 12 months. The client could have waited until those payments were more than a year old, but he needed the funds right away.
The Solution
We started with a well-known high street lender, since they had no specific policy on missed mortgage payments and assessed applications on credit score instead. This case was declined for not meeting the minimum score required, though the lender only ran a soft check, so the client’s credit report was unaffected.
We then approached a lender that specialises in bad credit mortgages for clients who have previously experienced credit problems. This lender approved the application, since the arrears had been paid in full and the client could evidence no missed payments in the previous six months.
The Outcome
The remortgage completed at up to 85% loan to value, releasing the funds the client needed for the vehicle purchase and his daughter’s university costs. Because the declined application never went beyond a soft credit check, it left no mark on his file and had no bearing on the successful application that followed.
Frequently Asked Questions
Can I remortgage with adverse credit?
Yes, specialist lenders exist specifically for clients with adverse credit.
Access to these lenders is usually restricted to applications introduced through a broker, and typically only whole-of-market brokers work with them.
How soon after missing a mortgage payment can I remortgage?
Most mainstream lenders decline outright if a mortgage payment has been missed in the last 12 months.
Specialist lenders take a more flexible view, particularly where arrears have since been paid in full and no further payments have been missed.
Will being declined by one lender affect my credit score?
Not necessarily – it depends on whether the lender ran a soft or hard credit check.
A soft check, which many lenders use for an initial assessment, leaves no trace on your credit file and will not affect a subsequent application elsewhere.
What loan-to-value can I get with adverse credit?
It varies by lender and circumstances, but 85% loan to value is achievable in the right case.
The exact figure depends on how recent and how serious the credit issues were, and how well they can be evidenced as resolved.
If you have any questions relating to an adverse credit remortgage, contact us today to speak directly with one of our Mortgage Advisors.
UK Mortgage Broker is a whole-of-market broker directly authorised and regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on your mortgage.
Call: +44 1628 969 500
Email: info@uk-mortgagebroker.co.uk
Related Pages
- Bad Credit Mortgages UK – specialist advice for borrowers with adverse credit history
- Residential Mortgages – whole-of-market advice for homeowners across the UK
- Why Mortgages Get Declined UK – the most common reasons applications fail and how to avoid them
- Buy-to-Let Mortgages – whole-of-market advice for landlords across the UK