Mortgage FAQs

A decision in principle is also known as a mortgage in principle or an agreement in principle.

It gives you an informed indication of what the lender is prepared to  let you borrow after they have run their initial credit searches, it also indicates that they are happy to proceed having looked at  your credit history.

Most Estate Agents ask you to show them your decision in principle before they allow you to view properties, so it is a good idea to have a your mortgage advisor get you this as early as possible.  We can usually provide a decision in principle for you the same day.

The loan to value (LTV) is the amount of mortgage required compared to how much the property is being purchased for and is shown as a % figure.

For example if a property is £100,000 and you have £10,000 deposit this is a 90% LTV

Lenders interest rates improve the lower the loan to value, if you are putting down a 25% deposit, there is less risk to the lender than if you are putting down a smaller deposit of say 10% so they reflect this by giving more favourable interest rates.

With a fixed rate mortgage the amount you pay each month stays the same for the agreed term, usually 2,3,5 or 10 years.  This gives you peace of mind when it comes to budgeting your monthly outgoings, however, if the Bank of England Base Rate goes down your payments will not go down they will stay the same because they are a fixed for the period.  There are usually early repayment charges if you repay over a certain amount or in full during this fixed rate period.

A variable rate and a tracker rate mortgage go up and down with the Bank of England Base rate, you therefore benefit if the Bank of England Base Rate goes down, however, if it goes up you will have to pay more.

The Bank of England base rate is an interest rate, sometimes referred to as bank rate or base rate.

The base rate is the interest rate that Banks and Lenders pay when they borrow money from the Bank of England.

The base rate is the most important interest rate in the United Kingdom because it influences mortgage rates, savings interest rates, credit cards, loans and virtually all borrowing.

When the Bank of England increase the base rate interest rates go up and when they decrease the base rate usually interest rates go down.

Generally speaking mortgages will be for a maximum term of 35 years, there are some lenders that will go to a 40 years. 

It is important to note that the longer the mortgage term, the more interest you will pay, this is something that we will discuss during our conversations to get the right balance for you.

Arranging a mortgage is not usually straight forward, trying to find the right lender at the best interest rate is like a puzzle no matter what your score

A Specialist Mortgage Advisor is an qualified, experienced advisor who specialises in Poor or Bad Credit Mortgages and has direct access to specialist lenders who are able to accept, excessive amounts of debt,  missed or late payments, defaults, CCJ’s,  debt management plans, IVA’s and even Bankruptcy.

Bad credit is NOT unusual, we do not judge, after all we see poor credit daily, its what we do best and we believe that everyone deserves a chance.  We listen to you, answer your questions and start creating a plan, in some instances we can get people with a poor credit history to a high street lender because we know their criteria inside out, but if this isn’t possible we will go to the greatest lengths to find you a solution and will not give up on you.  In recent years the need for Specialist Mortgage Advisors has grown because of the economic climate.

The worst thing you can do if you do have bad credit is let a non specialist mortgage advisor start putting in applications to lots of different lenders trying to find a mortgage for you, this will negatively affect your credit score and chances of getting a mortgage and if you have been previously declined don’t allow them to keep guessing. 

If you have been turned down for a mortgage because of credit, you would benefit from speaking to an experienced poor credit mortgage specialist Advisor who knows their stuff and has helped many others, they will be able to identify lenders who will accept your criteria, they will exhaust every option for you.

Yes, don’t be disheartened, we can help you.

There are options available to you if you have a bad credit history with any of or all of the following, arrears, late payments, County Court Judgements (CCJ’s), defaults, high debt to income, excessive borrowing, debt management plans IVA’s or bankruptcy.  There will be fewer lenders who will accept your mortgage and the interest rate % will be higher that for someone with a good credit history.

Our specialist mortgage advisors are experts in this field and have direct access to sub prime and adverse mortgage lenders, we speak with their underwriters daily and know who to match your credit history with, it’s a bit like a puzzle, it takes effort, but we have done it before lots of times so are confident we can help you

High street lenders will want you to have at least 3 years clear of any small blip on your credit file and with bad credit its usually over 5 years because they will consider your application this is because they are what we would call “Vanilla” they don’t like anything out of the ordinary, they like to be sure that you are good lending prospect and have not repeated the same behaviour, in other words they are looking to lend only to people with a good credit history.

That said there are lots of sub prime lenders (lenders who will accept poor credit) and adverse lenders (lenders who accept bad and really bad credit) in the United Kingdom.  These lenders open the door to people with less than perfect credit history and all have differing criteria so if you have had financial difficulty in the past they are inclined to lend  to you.

 so it’s a BIG FAT YES IT IS POSSIBLE………. to get a mortgage with a bad credit history but you need to use a specialist mortgage broker to help you do so.

More importantly if you chose us to help you, we will aim to get you back to a highstreet mortgage lender as soon as possible and help you keep on top of your finances so you can do just that.

Credit reference agencies have access to your credit history and lenders have access to credit reference agencies.

If you have missed any payments even if it was a mistake, these will have been recorded on your credit report, so will defaults, ccj’s, and every credit agreement you have.   What a lot of people don’t know is that an excessive amount of borrowing is also considered bad, even if you make the repayments on time.

All lenders in the United Kingdom will run a credit search on you, they want to see how you have conducted previous credit arrangements how much you owe,  a poor credit score will affect how a lender views you as a risk to them.  Most lenders have an internal credit score and if you don’t pass this you  will usually be turned down.

If you have been turned down elsewhere, DON’T PANIC, this is where we can help you because we know what lenders like and what they don’t, this is called criteria.  As specialist mortgage advisors it is our job to match your criteria to a lenders criteria and get you a mortgage.

To improve your credit there are things you can do, we will assess your credit history and advise you on this as part of our service, but here are a few things that will help;

• Make sure you set up direct debits for every bill, stop relying on apps and bills to remind you
• Don’t take out credit cards or loans to build your credit, although some credit reports you run will recommend this, it is only a good idea if you don’t have any other credit at all, the credit report agencies get paid to refer you.
• Pay as much as you can off existing loans if they are near to their limit – it looks bad to lenders if you are near to the limits
• This one is easy, go through your monthly bank statements
  • Check all of your direct debits, are you still using the services, do you need them
  • Coffee shops and quick stops, do you really need to use these as much as you are
  • Amazon and paypal, be careful we are all guilty of clicking of an evening, it’s because we don’t directly associate click spending with real money, ask yourself if you were in a shop would you pick this up, queue at a till and purchase  (I did this exercise myself recently and was fascinated at what I had unnecessarily purchased and wasted money on)!

The difference is that a general mortgage broker tends to deal with high volumes of customers with quick turn around times, they are looking for people with clean credit, good income, and perfect bank statements.  

A general mortgage broker may send your application to several lenders at the same time in the hope that they get your mortgage accepted by one or more of them.

SPECIALIST MORTGAGE BROKER

A Specialist Mortgage Broker will have a lower turnover of customers, spend more time with their customers getting background information and scrutinise every element of the customers credit history, income and bank statements in order to package everything and have supporting documentation ready for the lender, specialist mortgage brokers don’t put the application in until they have everything they need and know the answer to all the questions that the lender will, or may ask.  MORTGAGE ADVISORS THAT SPECIALISE IN BAD CREDIT are used to dealing with bad credit mortgage applications and because of their knowledge, really do give you the best chance of getting your mortgage accepted with bad credit.

It’s very similar to the difference in visiting your local G.P. or seeing a specialist doctor who knows everything about your situation because they have dealt with lots of similar cases.

Here at A Little Mortgage Advice you will be dealing with an experienced Adverse Credit Mortgage Broker, this is a Mortgage Broker that deals purely in finding a mortgage for people with bad credit and know exactly what each lender will accept in their criteria.

Having a bad credit record will affect your chances of getting a mortgage because mortgage lenders want to be comfortable that you will make your monthly mortgage repayments on time and every month, having a bad credit history is evidence that in the past you have not kept up to date with your credit commitments and therefore you are a higher risk to them rather than someone with a good credit history who has always paid everything on time.

There are lenders that do accept poor credit history, bad credit history and extremely adverse credit history.

Having bad credit usually means you will pay a higher interest rate because the lender considers you a higher risk than someone with a good credit history.

If you are currently in a fixed term mortgage period, your payments will not change because of your bad credit, however, when your fixed rate comes to an end you may struggle to get a better rate with a different lender until your credit history improves.  A product transfer with your existing lender may be the best solution.

A bad credit mortgage expert will be able to assess your credit report and tell you if you can change lenders to get a better rate or if you should stay put with your existing lender until your credit improves.

A bad credit history is an indication that you may not keep up with your mortgage repayments, a mortgage lender will consider you to be more of a risk  than someone who has good credit.

There are several bad credit markers that a potential lender will be looking for, late payments as a one off,  frequent late or missed payments, defaults, ccjs, IVA’s and Bankruptcy.

Your credit history shows the amount of current debt you have, if you rely heavily on short term loans, credit cards, car finance, your overdraft etc, even if you have repaid everything on time, this can have a negative impact on your chances of being a accepted for a mortgage,  the mortgage lender may view this as living beyond your means and therefore you may not be able to afford a mortgage.

There are many more factors to take into consideration that help outweigh bad credit for example, employment history, income, deposit available and age.

Good news is, there are lenders who specialise in bad credit mortgages, they allow bad credit within their criteria, a specialist bad credit mortgage broker will be able to improve your chances of being accepted for a mortgage and what you can do to improve your chances.