Adverse & Bad Credit Mortgages

Are there any adverse credit mortgages with guaranteed approval?

As with anything in the mortgage world, sadly nothing lenders claim to offer is guaranteed.

There are however, lenders who accept a huge and severe range of credit issues that often stems far past what most borrowers believe to be possible.

This includes defaults and arrears as recent as last month borrowing up to high loan to values, right through to previous repossessions or bankruptcies a year ago, with discharge of 3 years previous being able to borrow up to high loan to values.

Bear in mind that mortgage approval comes in 2 stages: an initial agreement in principle (AIP) and a full application approval. Once the initial application is submitted, the underwriter will still need to sign off your application with a full assessment of your documentation and reasons for the credit issues, to establish if you're likely to be at risk of defaulting in future.

For this reason, it's important to not view an AIP as a guarantee, and to wait until the mortgage has been underwritten and signed off in full. The most suitable way to seek approval with an adverse credit mortgage lender is to have a specialist review your credit files (all of them) and match you with the right lender who'll accept the issues on record.

Before even approaching the lender formally, the specialist can establish your exact situation, and then discuss the case with the lender directly to get a verbal acceptance before proceeding. This way, when the case passes the AIP stage you can be far more confident in the decision, as the likelihood of it going through at full application stage is much higher.

Adverse credit history mortgages usually (with the exception to bankruptcy as you may also appear on the hunters register) relate directly to what is showing on your credit file.

It may shock you to hear, but different lenders use different credit reference agencies. They may share their records to make sure their information is accurate, but often this doesn't happen.

This can lead to a situation, where one lender using Experian may decline you for a default that another lender using Equifax or Call Credit might not see.

High street lenders adverse credit customers

Contrary to popular belief, it is sometimes possible for high street mortgage lenders to accept adverse credit applications, but only in the right circumstances when applied for in the right way.

Many high-street lenders will never accept your application if issues are severe enough (such as bankruptcy / repossession), however if such issues are historical enough some can be more flexible.

Typically, any issues will need to have fallen off your credit file to fit with these lenders, but it is sometimes possible for a specialist to present the back-story and justification of issues to a lender in the right way, so if they have an appetite to lend they may consider going outside their usual policy by exception.

This is far more likely if your case is strong in all other areas, for example you aren't borrowing a large amount compared to your income, and you have a large deposit (65% loan to value or less is often the tipping point).

Specialist adverse credit mortgage lenders

Specialist lenders is the more acceptable way of saying sub prime which is the old word for a borrower who doesn't fit mainstream criteria. Historically this mean people with severe adverse credit.

If you are looking to find subprime mortgage lenders for adverse credit borrowers, then these are the same as specialist adverse credit mortgage lenders.

As lending in the high-street continues to move toward the more mainstream borrower (someone with no history of credit issues and very straightforward and stable income, with large deposit), more and more customers fall outside this remit and are considered more specialist.

This has seen increased demand for specialist advice, and increased competition by lenders in these markets, hence the fantastic rates now available.