Non Standard Mortgages - Impaired Credit
Bad Credit Lending Criteria
The majority of lenders in the sub prime market employ
specialist underwriters rather than an automated credit
scoring system and assess cases individually. This allows
lenders to focus on whether you are willing and able to
make your repayments, rather than whether you have historically
always done so.
If you do have some form of impairment to your credit history,
the first thing to do is to make the lender fully aware
of the details of your financial circumstances. Keeping
things hidden or not disclosing the full details will not
help your cause and you should be as open and as honest
as possible. If for some reason the lender finds out that
you have lied, you will not get the mortgage and you may
even face further action, depending on how far you get with
your application or even mortgage repayments before the
truth comes to light.
Most lenders will take an holistic view an look at the
size, nature and timing of the debt. For instance, if you
went through a divorce, fell behind with your loan repayments
but then got back on track and have been fine since, your
situation is much more likely to be looked on sympathetically
than someone who consistently runs up large debts and falls
foul of his or her creditors.
Once a lender is possessed of all the facts, they will
then make a decision taking into account your individual
situation and the type of case they are looking to take
on.
Not all non-conforming lenders are looking for the same
type of business, which is why the lending criteria will
be different depending on who you go to. There are many
lenders who will consider your case if you have one CCJ
or minor bad credit event. There are a decreasing number
who will lend to people with multiple CCJs or who show evidence
of a persistently bad credit performance. The acceptable
lending criteria can be broken down even further and some
lenders are highly specific in terms of the type of cases
they with policies such as:
Even in the worst circumstances, as long as you are talking
to a lender at the right end of the sub-prime spectrum and
you can show that your situation has changed and that the
reasons for the earlier defaults were due to exceptional circumstances,
then you should still be able to secure some borrowing.
It's worth remembering that individual products have thresholds
of tolerance as well as the lenders themselves. Generally,
the more extreme the circumstances, the higher the rate you
will pay and the more restrictive the loan amount and loan-to-value
terms. This means that you should shop around and find the
mortgage and the lender that is right for you, particularly
if your credit history is only marginally impaired.
