Your credit score is important when applying for a mortgage. Having a lending institution run credit checks on you can be daunting. It can be a nail-biting experience, especially if you are acutely aware of your history of adverse or a credit score that has seen better days. There’s also the additional concern if your mortgage application is declined based on the result; applying for a mortgage or any other finance can further negatively impact your credit score. You need to ask yourself, if you are already on shaky grounds regarding your credit file, should you be applying for a mortgage? Your answer should be, after seeking the right advice.
How can we help?
At Connect Mortgages, we understand the difficulties faced by individuals struggling to secure a mortgage or dealing with issues related to their credit score. Our team of mortgage specialists is committed to providing expert advice and helping clients achieve their property ownership goals.
Struggling to Get on the Property Ladder? We Can Help
If you feel disheartened about getting on the property ladder or escaping high interest rates imposed by your current lender, we are here to assist. We focus on understanding your specific situation and have in-depth knowledge of lenders most likely to approve your application. Our goal is to offer tailored advice that fits your needs without adding to your financial concerns.
Specialist Support for Adverse Credit Applications
Within our mortgage hub, we have a team of adverse credit specialists ready to support your application. We have extensive experience working with clients who have less favourable credit profiles. Our specialists understand the complexities involved and can match your application with lenders offering flexible criteria for applicants with adverse credit.
A Tailored Approach to Mortgage Applications
Our fact-finding process gathers all the essential information to present your application in the best light to potential lenders. We recognise that each client has unique circumstances, and we take the time to evaluate your financial history and goals. This approach allows us to identify lenders likely to offer suitable terms and conditions based on your needs.
Helping You Improve Your Financial Situation
Our primary aim is to help you secure a mortgage that meets your requirements and improves your financial situation. We value transparency, honesty, and providing solutions that work for you. By choosing Connect Mortgages, you gain access to our expertise, extensive lender network, and dedication to excellent service.
What are my chances?
Your chances of securing a mortgage, even with adverse credit affecting your credit score, remain positive. Although mortgage lenders view adverse credit as a risk, there are several ways to offset this risk and still access mortgage options:
Larger Deposit:
Lenders may ask for a larger deposit, which reduces the loan-to-value ratio and lowers the amount borrowed. Providing a larger deposit can help reduce the lender’s risk and improve your chances of approval.
Higher Interest Rates:
Mortgage rates for applicants with adverse credit may be higher than standard products. Some lenders offer tiered rates designed for varying levels of adverse credit. While these rates may be higher, suitable mortgage products are still available.
Demonstrating Financial Responsibility:
Lenders may require evidence that you have addressed any defaults or arrears and have a plan to clear outstanding debts. They may also assess the timing of defaults or County Court Judgements (CCJs) and may set limits on acceptable debt levels.
Explanation of Adverse Credit:
Lenders may request an explanation of how your adverse credit issues arose. A clear and honest account can help lenders better understand your situation and make an informed decision.
It is important to note that evidence of arrears on a previous mortgage or secured loan may affect your application. However, if you have no missed payments in the last 12 months, lenders are likely to consider your application. With access to over 170 lenders, Connect Mortgage Advisers can help you find the most suitable mortgage based on your credit profile.
By working with Connect Mortgage Advisers, you can benefit from our experience and lender relationships to improve your chances of mortgage approval. We will evaluate your circumstances, identify lenders willing to meet your needs and recommend the most suitable product.
If you are concerned about obtaining a mortgage due to adverse credit, contact Connect Mortgage Advisers today. We offer personalised advice, guide you through the process, and explore options from a range of lenders. With our support, you can increase your chances of securing a mortgage and achieving property ownership goals based on your credit profile.
Should you buy a house now or wait to improve your credit score?
Deciding whether to buy a house now or wait to improve your credit score is a personal decision that depends on your individual circumstances and priorities. To help you make an informed choice, let’s consider the pros and cons:
Pros:
Plenty of Choices:
Currently, numerous options are available in the housing market, and many lenders are becoming more flexible when considering applicants with adverse credit. This means you have a wider range of choices and opportunities to find a suitable property and secure a mortgage.
Starting Your Homeownership Journey Sooner:
Buying a house now allows you to embark on your homeownership journey sooner rather than later. Homeownership can provide stability, the freedom to personalise your living space, and the potential for long-term financial benefits, such as building equity.
Cons:
Higher Interest Rates:
If your credit history is less than perfect, you may encounter higher interest rates when applying for a mortgage. Lenders may view adverse credit as an increased risk, resulting in higher borrowing costs. It’s important to consider the impact of these higher rates on your monthly mortgage payments and overall affordability.
Larger Deposit Requirement:
A lower credit score may also lead to a requirement for a larger deposit. Lenders may ask for a more substantial upfront payment to offset the perceived risk associated with adverse credit. This means you’ll need to have a larger sum of money saved or be prepared to wait until you can accumulate a sufficient deposit.
Ultimately, buying a house now or waiting to improve your credit score depends on your financial situation, long-term goals, and personal preferences. If you have the financial means to afford higher interest rates comfortably and meet the deposit requirements, purchasing a house now may be a viable option. It allows you to enter the property market and potentially benefit from future property appreciation.
On the other hand, if you have concerns about the affordability of higher interest rates or are determined to improve your credit score to secure more favourable mortgage terms, it may be wise to wait. Enhancing your creditworthiness can lead to better interest rates, lower borrowing costs, and potentially more attractive mortgage options.
To make an informed decision, it is advisable to consult with a Connect Mortgage Adviser. We can assess your financial situation, provide personalised advice, and help you determine the best action. We have the expertise and access to a wide range of lenders, allowing them to guide you towards the most suitable mortgage options based on your current credit score and financial goals.
Remember, buying a house is a significant financial commitment, so it’s essential to carefully evaluate your circumstances and make a decision that aligns with your long-term financial well-being.
Mortgage applications and ways you can look to improve your credit score
Register with a credit reference agency and download your statutory credit report for free. Check that the information is correct. It may take up to 28 days for a dispute to be resolved.
Ensure you are on the electoral roll. The electoral roll confirms your address as stated on your application. It may take 6 to 8 weeks for this to reflect positively on your credit score after registration.
Keep your rent payments up to date. Some lenders may contact your housing association or council for a reference.
Consider using Experian Boost. This tool allows Experian to access your current account data. It can improve your credit score by up to 66 points.
Use only ‘soft searches’ when applying for new credit. Avoid multiple applications, as they can make you appear desperate for credit and suggest past rejections.
Maintain a low credit card balance. Owing more than 90% of your credit limit can reduce your Experian score by up to 50 points.
Avoid Negative Financial Practices
End financial links with ex-partners. Their poor financial history can affect your credit rating.
Avoid county court judgments and bankruptcy. Being declared bankrupt, entering an Individual Voluntary Arrangement (IVA), or having a county court judgment can harm your credit score. A CCJ can lower your score by 250 points, and defaulting may result in a 350-point reduction.
Pay more than the minimum amount on your credit card each month.
Never miss payments. Missing one payment can lower your score by as much as 130 points.
You may need to apply several of these steps to see a significant improvement. Improving your credit score takes time, but seeking expert advice is always a good decision. Speak with us today to get started.
Thank you for reading our “The Impact Mortgage Application Has On Your Credit Score.” Stay “Connect“-ed for more updates soon!
