Do I Still Need an Adverse Mortgage? | If your credit history has improved, you may be wondering if you still need an adverse mortgage. This is a common question for borrowers who previously experienced missed payments, defaults, or other credit issues. In a previous article titled “Obtaining a Mortgage Despite Your Partner’s Poor Credit,” we explained the challenges borrowers may face and the options available.
An adverse mortgage is designed for people with a poor or limited credit history. However, it is not always a permanent solution.
What Is an Adverse Mortgage?
An adverse mortgage is a specialist mortgage for borrowers with past credit issues. This may include missed payments, County Court Judgments, defaults, or previous insolvency.
These mortgages often come with higher interest rates due to increased lender risk. Many borrowers use them as a short-term step before moving to a standard mortgage.
You can learn more about this option on our Adverse Credit Mortgage page.
How Bad Credit Influences a Mortgage Application
When you apply for a mortgage, lenders carry out a credit check to review your financial history. This helps them assess how likely you are to keep up with repayments over the mortgage term.
If you have poor credit, your lender options may be more limited. Some lenders may decline your application, while others may still consider it under stricter criteria. This often means a higher deposit requirement or a higher interest rate to reflect the increased risk.
Even if your own credit history is strong, a joint application can be affected by a co-applicant with bad credit. Lenders assess all mortgage applicants. If one applicant has a poor credit record, the application may be viewed as higher risk. This can result in less favourable terms or reduced borrowing options.
Not all bad credit is treated the same. Mortgage lenders look at the type, severity, and timing of credit issues. Examples include missed payments, defaults, or a County Court Judgment. Older credit problems that have been resolved are often viewed more positively than recent or ongoing issues.
In some cases, borrowers with bad credit may need to consider an Adverse Credit Mortgage. These products are designed for people who do not meet standard lending criteria. As your credit profile improves, you may later be eligible to move to a Residential Mortgage at more competitive rates.
A mortgage broker can review your circumstances and explain which lenders are most likely to consider your application. This ensures you receive advice based on your full financial position and current lending criteria.
When You May Still Need an Adverse Mortgage
You may still require an adverse mortgage if:
- Your credit issues are recent
- You have ongoing missed payments
- You have not yet rebuilt your credit profile
- Your income or deposit is limited
In these cases, specialist lenders may still be the most suitable option.
When You May No Longer Need an Adverse Mortgage
You may be able to move away from an adverse mortgage if:
- Your credit has improved over time
- You have maintained payments consistently
- Defaults or CCJs are older
- Your income and affordability have strengthened
At this stage, remortgaging to a mainstream lender may reduce your interest rate and monthly payments. A broker review is essential to assess your options.
Exploring Mortgage Options With Mixed Credit Scores
Applying for a mortgage when you and your partner have different credit scores can be more complex, but it is often still achievable. Even if one applicant has a strong credit profile, mortgage lenders will assess both credit histories when reviewing a joint mortgage application.
How Mixed Credit Scores Affect a Joint Mortgage
When one applicant has a poor credit history, lenders may view the application as higher risk. This can influence the interest rate offered, even if the other applicant has excellent credit. Factors such as missed payments, defaults, or County Court Judgments are typically considered alongside income, affordability, and deposit size.
In some cases, a joint application may still be approved, but on less favourable terms. Understanding how lenders assess mixed credit profiles is essential before proceeding.
Specialist Lenders and Flexible Mortgage Options
Some specialist lenders take a more flexible view of credit history and may consider applications with mixed credit scores. These lenders often assess overall mortgage affordability rather than focusing solely on credit score.
Working with an adviser ensures your application is presented clearly to underwriters. This can improve the chances of securing better mortgage terms, even if one applicant has a history of credit issues. In some cases, a specialist mortgage may act as a temporary solution before moving to a standard mortgage through a future remortgage.
Exploring Alternative Mortgage Options
If your situation has improved, you may now qualify for:
- A Remortgage to a high street lender
- A Residential Mortgage with better rates
- A Fixed Rate Mortgage for payment stability
A whole-of-market broker can compare both specialist and mainstream lenders to find the most suitable solution.
What Does a Joint Mortgage Application Involve?
A joint mortgage application is when two or more people apply for a mortgage together. This is most common for couples, partners, or family members purchasing a property jointly.
With a joint mortgage, all applicants are assessed together. Lenders review income, credit history, and financial commitments for each person named on the application. Responsibility for the mortgage is shared, meaning all parties are jointly liable for repayments.
Benefits of a Joint Mortgage
A joint mortgage can improve your chances of approval. Combining incomes may allow you to borrow more than you could apply for on your own. Lenders often view joint applications as lower risk when both applicants have stable incomes and good payment histories.
In some cases, a joint application can also help secure more competitive mortgage rates, particularly when affordability is stronger.
How Credit History Affects a Joint Application
Credit history plays a key role in joint mortgage applications. If one applicant has a poor credit record, it can affect the whole application. Lenders may limit the products available or apply higher interest rates to reflect the increased risk.
Getting Advice Before Applying
A broker can also explore whether a joint application or a sole application with a joint-borrower, sole-proprietor structure is more appropriate. This ensures the mortgage matches your circumstances and plans.
Taking advice early can help you avoid unnecessary declines and improve your chances of securing the right mortgage.
If you are unsure whether you still need an adverse mortgage, professional advice can help clarify your options. A review could reveal more competitive products that better suit your current circumstances.
Thank you for reading our “Do I Still Need an Adverse Mortgage? | Question to a Broker” publication. Stay “Connect“-ed for more updates soon!
