Bad Credit Mortgages

In 2021, the government launched the mortgage guarantee scheme aimed at helping buyers who have only 5-9% deposit.

Not all lenders use the scheme. That means you’ll have less to choose from which might make it harder to find a lender that’s both on the scheme and able to lend to people who’ve had credit problems.

But the lenders that are on the scheme use the same affordability and eligibility criteria as a standard mortgage, which means some might still consider you if you’ve had credit problems.

It’s possible to remortgage with bad credit, especially if your credit problems are quite minor, like a single late payment.

As with any other mortgage applicant, you won’t be eligible for some of the better deals available to those with good credit. Interest rates and fees will be higher.

Use a free online credit report service. You’ll have to provide details about your banking and credit accounts to access your report.

Alternatively you can get a FREE trial with Check my File here, Try it FREE for 30 days, then £14.99 a month – cancel online anytime

It’s likely you’ll have to wait until your bankruptcy is removed from your credit record, which can be six years from the date of your bankruptcy

If you’ve fallen behind on mortgage payments, or even had a home repossessed, finding a mortgage again can be quite difficult. But it’s not impossible.

You’ll have to rebuild your credit score by paying all bills on time. And you’ll probably need to use a mortgage adviser to apply to a lender that might accept you – despite having a past repossession.

How much you can borrow for a BTL mortgage usually boils down to the amount of rental income that you’re expecting to receive from the tenants of the property.

Although there are lenders offering BTL mortgages with no borrowing limit, eligibility assessments are still stringent, and applicants are advised to acquire a rental income forecast from an ARLA-regulated letting agent.

While the majority of buy-to-let mortgage providers base affordability on projected rental income, some will only agree to lend if you bring in a certain amount from other sources – regardless of whether you intend your investment to be self-funding.

If you don’t receive any additional income, seek advice from a broker. They are familiar with the buy-to-let mortgage market, and can point you in the direction of lenders most likely to consider applications based on rental income alone.

Deposit requirements for buy-to-let mortgages are far higher than residential ones, as they are considered a riskier investment.

The standard loan-to-value (LTV) for BTL is around 75-80%, which translates to 20-25% deposit – although some providers may be more generous for the right applicant. Likewise, if you pose a greater risk in other areas (e.g. bad credit or low rental yield), a lender may have higher deposit requirements to balance out the risk.

Generally speaking, the more deposit you’re able to put down, the greater the lender pool and the more favourable the interest rates you’re likely to be offered.

While mortgage providers can be reluctant to lend to people with bad credit history, plenty of lenders are happy to take the bigger picture into account before coming to a decision. There are even specialist bad credit mortgage providers out there.

The type of bad credit, how long ago it occurred and the circumstances surrounding it will impact which lenders are available, the type of products you qualify for, and under what terms. Depending on your situation, you may be asked to pay a higher deposit to offset the added risk, or you may be offered less competitive rates than someone with clean credit.

There are a number of variables at play, so if you have poor credit you’re best off discussing your circumstances with a broker, who can explain your options and point you in the direction of lenders most likely to consider your application.

Most mortgage providers won’t lend to BTL borrowers unless they already own their own home, and some will stipulate that you have to have been a homeowner for over a certain amount of time.

Generally speaking, BTL mortgage providers favour customers with landlord experience, as evidence of a strong track record of managing rental properties will provide additional support to your application.

There are however some providers who are willing to consider BTL applicants that are first-time landlords or even first-time buyers, although you may be limited in your choice of lenders, and there could be caveats attached.

As a general rule, most BTL lenders will only consider applicants over the age of 21 for a BTL mortgage. This is because lenders like to see proof of your ability to manage money (stable income, solid affordability and clean credit) over a minimum three year period.

The number of lenders you have access to may also be limited if you’re over the age of 75; many mortgage providers have maximum age caps for how old you are when you take the mortgage out, and your age when the term finishes.

If you’re concerned that your age will negatively impact your BTL application, get in touch to discuss your options with a broker; they will be able to advise you on next steps, and point you in the direction of specialist lenders with more flexible criteria.

If you’ve got the means and opportunity, becoming a landlord can be a tempting investment prospect. But it’s important to understand the market and what you’re letting yourself in for – why not ask a mortgage broker to explain the process in more detail?

An equity release product allows you to access the value (cash) tied up in your home. Rather than leaving the cash tied up in your home, more and more people are choosing to release this money giving them cash to fund retirement dreams, pay off debts or help out family members. You must be over 55 and seek advice from a financial adviser before you can access an equity release product. There are a range of products available which allow you to release money from your home either as a lump sum or in regular smaller amounts, known as drawdown. At Missing Element Equity Release we only advise on lifetime mortgage products. Try out our free Equity Release Calculator to see how much equity you could release from your home.

All equity release products, including lifetime mortgages, are regulated by the FCA (Financial Conduct Authority). They impose strict rules on advisers who recommend these products and the companies that provide them. All lifetime mortgage advisers have to be fully qualified and are required to give you fair and clear advice and recommendations.

Yes, but you will need to raise enough money on a lifetime mortgage to pay off the existing mortgage with your current provider.

To be eligible for a lifetime mortgage you need to be a UK homeowner and aged 55 or over. All applications are subject to the lending criteria of the product provider. Our advisers can answer any questions you have, contact us for a free initial consultation.

You retain full ownership of your home with a lifetime mortgage as long as you abide by the terms and conditions of the mortgage. All lifetime mortgage products provide the right for applicants to live in their home until they die or go into permanent long-term care.

Yes – you will be able to remain living in your home for as long as you are alive or until you go into long-term care, as long as you abide by the terms and conditions of your plan.

Some providers offer an inheritance guarantee to ensure you can leave something from the value of your home. However, this will reduce the amount of money you can borrow.

All lifetime mortgage products provide the right for applicants to live in their home until they die or go into permanent long-term care. If the application is made in joint names and one of you moves into care, the other will be able to stay in the home until either they die or go into long-term care as well.

No, all equity release schemes offer a no negative equity guarantee meaning that when you finally repay the debt (when you or the last person dies or goes into long-term care) the amount to be repaid will never be more than the value of your home (provided the T

This depends on the lifetime mortgage product you decide on. With lifetime mortgages you can usually repay the amount in full but you may incur an early repayment charge. This will depend on the specific scheme, how long you’ve held the mortgage for and the reason for repayment. If the option of early repayment is important to you, your adviser can discuss this with you and take it into consideration when making a recommendation to you.

The Equity Release Council (ERC) is an organisation that was created to promote and support providers offering equity release products. The council is committed to ensuring that consumers are safeguarded and providers offer products that meet the Equity Release Councils rules and principles.

More and more people are now considering a lifetime mortgage as part of their financial planning for retirement. However, you must ensure that you are happy with how the lifetime mortgage works and the terms and conditions associated with it. You need to understand it will impact any inheritance that you leave to your beneficiaries and may impact your rights to state benefits. Because of this, it is a regulatory requirement to speak to a financial adviser before taking out a lifetime mortgage. A financial adviser will be able to listen to your needs and research your options amongst a wide range of mortgage providers.

All of our lifetime mortgage advisers are fully qualified to provide lifetime mortgage advice and hold the Certificate in Regulated Equity Release (or equivalent) qualification. Paul our advisor holds the CeRER, CeMAP

Any money released from a lifetime mortgage could affect means-tested benefits such as Pension Credit and Council Tax Credit. Your state pension is not affected and neither are any benefits based on disability or health. It’s important that you discuss any implications with your financial adviser.

We would recommend that you review your will when taking out a lifetime mortgage. You don’t normally have to alter your will but it will depend how it’s written.

Yes – a lifetime mortgage gives you the right to move to a suitable alternative property. There are some properties which may have restrictions based on the ability to sell the property on the open market when your plan comes to an end. Your financial adviser will be able to explain this in further detail.

If you have been appointed as an “attorney” under either an Enduring or Lasting power of attorney, (or alternatively as a “Deputy” under a court of protection order) please speak to one of our advisers who will be happy to explain what documentation we require and guide you through the advice process.

Yes. Arranging a lifetime mortgage may have an impact on the amount of inheritance tax your estate will have to pay. This is however a complex area and depends on the value of your estate, your situation as well as your personal circumstances. Please talk to us about your needs. Impartial information on inheritance tax can also be found on the Money Helper website.

Typically, around four to eight weeks from application, but this will depend on a number of factors such as whether you are looking for a like-for-like deal or if you want to increase the amount you borrow. If you are just looking for a better deal for your existing property and your affordability hasn’t changed – or has improved – you are well place for the deal to progress quickly.

Yes, but it will depend on the terms and conditions of your existing mortgage – and may work out expensive. Many mortgages have an early repayment charge , which can mean it’s cost prohibitive to remortgage before the end of the introductory period. But even if you’re locked into a deal, you don’t have to wait before looking at alternatives. From three to six months before the deal expires, you can have a remortgage in place ready to go.

You don’t have to use a solicitor, but it can take the worry out of making sure that the deeds of the mortgage are safely transferred to the new lender. Fortunately, most remortgages include a free legal package so your lender will take on the cost of the solicitor. Remortgaging is also generally more straightforward than a new mortgage so any costs incurred should be lower.

Remortgaging to release equity means borrowing more than with your existing mortgage. If you’re nearing the end of your current deal, you could look to remortgage for a larger amount, but this will depend on your affordability and what percentage of the property’s value you are looking to borrow. If you can’t or don’t want to change your initial mortgage, alternatives include taking out a second mortgage on the property.

Remortgaging happens when you change the mortgage you currently have on your property, either by switching it to a new lender, or by moving to a different deal with your existing lender.

Remortgaging happens when you change the mortgage you currently have on your property, either by switching it to a new lender, or by moving to a different deal with your existing lender.

The main cost of your remortgage will be decided by the interest rate your lender sets. They’ll usually decide this by considering the following factors:

• Your loan to value
• Your credit history

You should always factor in the fees you’ll need to pay before remortgaging, which can include:

• Arrangement fees: Most mortgages have arrangement fees which range from around £100 up to a couple of thousand pounds. Mortgage deals with the keenest rates tend to have the highest fee
• Legal fees: You might have to pay for a solicitor to take care of any legal matters if you’re looking to remortgage with a different lender

• Admin fees: The lender might charge for the cost of setting up your remortgage 
• Valuation: You’ll need to have your property valued so the lender can see its current market value – to check the loan to value ratio of the mortgage is correct

Your lender will ask you to gather a few documents to complete a remortgage. These might include:

• Your last three months’ bank statement
• Your last three months’ pay slips
• Your last two to three years’ accounts/tax returns if self-employed 
• Your latest P60 tax form (showing income and tax paid from each tax year)
• Passport or driving licence
• Proof of address, through utility/council tax bills