How adverse credit mortgages are helping first time buyers

Monday, 22nd May, 2017
Adverse credit mortgages

For those of you that keep up to date with Complete Mortgages’ articles, news and views, you’ll know that we have been proactive in ‘rebranding’ the adverse credit mortgage or, as it was more widely known, the sub prime mortgage.

Importantly, this is not because Complete Mortgages is an irresponsible Guildford mortgage broker. Nor is it because we refuse to accept its role in the 2007/8 financial crisis (unregulated sub prime mortgage lending was undeniably an instrumental factor).

Our reason for supporting the new wave of adverse mortgage lending is twofold. Firstly, lending of this nature no longer represents the sub prime lending of pre-2008, as you can read here. Secondly, it is increasingly becoming a way in which young first time buyers can successfully apply for a mortgage and therefore access the property ladder.

Around this time last year a TransUnion survey revealed that millennials are highly likely to have a bad credit or subprime credit rating, which limits their access to loans and, of course, mortgages. A recent article in the Telegraph also supports this by including ONS figures that suggest that almost 100,000 millennials who live with their parents believe that they will never move out.

This is a particularly disheartening scenario and one that, in many cases, stems from high student loans and the rising cost of living. Unfortunately, this can often lead to overdependence on credit, which, if not managed, can result in a bad credit rating.

The cycle is clear. The question now is how do we break it, or at least how do we help young first time buyers shortcut it? And that’s where the new wave of adverse credit mortgage comes into play.

Thankfully, first time buyers are now able to access up to 85% loan to value mortgages at 4.5 times their income with non-high street lenders.

Of course – and as pointed out in a previous Complete Mortgages article on sub-prime mortgages – there needs to be evidence that those applying for an adverse credit mortgage can make the required repayments. Likewise, applicants will need to apply for a mortgage in the knowledge that they will be paying more for the privilege.

However, when faced with living with your parents well into your thirties, a situation that is only compounded (and arguably prolonged) by escalating house prices, the modern day sub prime mortgage could prove to be a helpful springboard for many young people.

Regardless of situation and credit score, I would recommend those who think an adverse credit mortgage could be a viable route for them to get in touch with me or a member of the Complete Mortgages team to discuss their options.

To speak with a credit repair mortgage specialist contact Mark Lucas on 01483 238280 or email lucas@complete-mortgages.co.uk. Complete Mortgages also specialises in commercial mortgages, buy to let mortgages and limited company but to let mortgages.

By Mark Lucas, credit repair mortgage specialist at Complete Mortgages


How do I get a mortgage if I have a bad credit rating?

Friday, 29th July, 2016

So, you want to apply for a mortgage. And if that isn’t tough enough, you also have a poor credit rating to boot. Don’t worry, the doors of home ownership don’t need to close on you and you’ll be pleased to know that there is a way to ensure that you get your foot firmly on the property ladder.

If we cast our memories back to the credit crunch of 2007/8, when adverse credit mortgages (or subprime mortgages) were arguably one of the root causes of the financial crisis, you could be forgiven for thinking that a sub prime mortgage is one to avoid.

However many things within the financial services have changed over the last eight years and, thankfully, the sub-prime mortgage is one of them. For a more informed guide as to what’s changed and how adverse credit mortgages have undergone a facelift, read our article here.

Here, we will deal with the frequently asked questions the Complete Mortgages team receives when it comes to applying for a mortgage with a poor credit rating.

After all that happened, do subprime mortgages still even exist?

Yes, but they are now very different. Firstly, you have to demonstrate that you are able to make repayments. Secondly, sub-prime mortgages aren’t granted with the same reckless abandon they once were. They are very much regarded as a niche product and many lenders will only approve adverse credit mortgages if the applicant can show that they’ve experienced an ‘unexpected event’, such as divorce or business failure.

Where can I get a mortgage with a poor credit history?

Or, more to the point, ‘who will give me a mortgage with my bad credit rating?’. Given how there are more complexities around applying for subprime mortgages, we would recommend that this is one for a mortgage broker to handle. If they’re worth their salt they’ll be able to match your profile, lifestyle and circumstances with a suitable product. And when it comes to products, a reputable mortgage broker will have full access to a comprehensive product portfolio at any given time. Let’s face it, mortgage applications can be an arduous task at the best of times, so why not let your broker do the legwork?

Are subprime mortgages more expensive than prime mortgages?

Yes, they are. The costs vary and this is something to explore with your mortgage broker, however the structure – both in terms of cost and risk – is very different now from those on the market pre-crash. This is where your broker will add value, by presenting a suite of products that will match your needs and being able to discuss your options face to face.

Will the recent EU referendum outcome make it easier or harder for me to apply for an adverse credit home loan?

It’s really is too early to say. There are reports to suggest that the subprime lending industry is growing and that home loan products aimed at people with adverse credit has doubled in the last twelve months*, however the direct impact of the Brexit vote is still unfolding.

I think I need to apply for a subprime mortgage. What shall I do next?

Get in touch with a trusted and reputable mortgage broker, who will be able to guide you through your options and advise you on the best route to take. At Complete Mortgages, a Guildford mortgage broker, we have a specialist sub-prime mortgage team that is well versed in securing mortgages for those with poor credit scores. We will offer a free initial consultation but there would be an application fee (typically £749 to £999) if you want to go ahead.

Not looking for a subprime mortgage? Remember, we also arrange first time buyer mortgages, commercial mortgages and bridging loans, too. Simply contact us on 01483 238280 or email info@complete-mortgages.co.uk.

*http://www.yorkshirepost.co.uk/news/brexit-jitters-could-lead-to-a-resurgence-for-sub-prime-mortgage-markets-1-8025082