The irony of bad credit and mortgages

RedHEAD

Is it only me who is frustrated by the irony that we can't get a mortgage because of a bad credit rating and yet if we COULD get a mortgage our outgoing would reduce by 1/2 - 2/3 and we could pay off all our outstanding credit within less than a year?! :mad:

What we need are Investor Angels....! :A

muhandis

There's lots of work going on in the Proptech sector around peer to peer mortgages for residential borrowers but I suspect they are finding it difficult to work with the regulatory environment that exists plus the extremely low interest rates that currently exist in the market.

Landbay already provides p2p backed BTL mortgages but of course that is a significantly less regulated sector.

ACG

I tend to deal a lot with those that have bad credit, there are some people who genuinely had a hard time or were just too young when taking out credit and are now much better financially.

But there are a LOT of people who just say basically lay the blame at everyone elses door rather than their own. Lenders do not have the ability to work out who had a hard time and has moved on or those who messed up and learnt from it so their criteria just has to cover the level of risk they are prepapred to accept.

That being said, the one thing I do find ironic is that "adverse lenders" will usually accept defaults/CCJs/arrears in the last 1-3 years, but bankruptcy 6 years ago they will decline, where as the majority of high street lenders would accept bankruptcy after 6 years.

What bad credit have you got? Its uncommon that it cannot be overcome assuming a 15% deposit.

David_White

ACG wrote: »

But there are a LOT of people who just say basically lay the blame at everyone elses door rather than their own.

This is a very common theme sadly.

kingstreet

Lenders use risk-rated pricing.

Previous credit issues indicate higher risk and higher rates result.

You'd be amazed by the number of people I've remortgaged over the years to consolidate debt, left them £500 to £600 a month better off and I've suggested they overpay the mortgage to repay the consolidated debt faster.

I go back in two or three years and they've made zero overpayments and are paying that £500 a month out in credit they've taken out since. They just had to have that new car, holiday etc.

Some just can't live within their means and see their lifestyle as more important and fund it by spending the equity in their homes. Mortgage lenders get wise to this. Santander for example wisely assumes anything repaid from the proceeds of, or at the time of the new mortgage will be redrawn soon after, so the cost is taken into account for mortgage affordability.

Dandytf

What chance do I have in switching existing mortgage at end 5 year fix next Aug'

To a new fix with addional borrowing e.g. Approx 5-6 k to pay off SC DMP.

Current mtg 47k balance, flat value 72k.

RedHEAD

...that being the further irony of course, that if we could save a 15% deposit we wouldn't be in debt.... :-/

RedHEAD

Its uncommon that it cannot be overcome assuming a 15% deposit.

...that being a further irony of course, that if we could save up a 15% deposit we wouldn't be in debt...

ACG

You would be surprised.

What bad credit do you have?
Ie: Default - £500 - registered April 2015 - cleared/not cleared.

If you can list it like that, we can tell you if it is worth looking into further or not and if not when you are likely to be able to get on the ladder.

ap1985

RedHEAD wrote: »

Is it only me who is frustrated by the irony that we can't get a mortgage because of a bad credit rating and yet if we COULD get a mortgage our outgoing would reduce by 1/2 - 2/3 and we could pay off all our outstanding credit within less than a year?! :mad:

What we need are Investor Angels....! :A

I can understand where you're coming up. Because of my credit rating I was unable to get a mortgage for years. Yet I knew that we could afford a mortgage as my rent was double what the mortgage payments would have been. (Thankfully after clearing my credit file, I am able to get a mortgage).

Westminster

Dandytf wrote: »

What chance do I have in switching existing mortgage at end 5 year fix next Aug'

To a new fix with addional borrowing e.g. Approx 5-6 k to pay off SC DMP.

Current mtg 47k balance, flat value 72k.

Might be a good idea to start a new thread of your own.

However, general advice is to avoid switching unsecured debt (DMP - which may be already at 0% if you have had your fees and interest frozen) to secured debt.

Any difficulties paying off your DMP result in easy to handle consequences.

If you can't pay your mortgage, the consequences are significantly more unpleasant.