Special feature: Shop around for adverse credit mortgages

Nia Williams

September 10, 2013

Halifax and Barclays will consider a mortgage for someone with a satisfied County Court Judgement although Barclays insists it cannot be within the last three years.

For those who have experienced worse problems such as an Individual Voluntary Arrangement or bankruptcy all is still not lost.

Barclays will consider someone who has been the subject of a Debt Relief Order or an IVA as long as the applicant has been discharged for at least six years at the date of submission of any mortgage.

Other lenders are more lenient still as Accord will consider someone with a satisfied IVA over three years ago or a discharged bankrupt for the same period.

Skipton would also consider these actions but after a period of four years.

The main problem is still likely to be getting through lenders’ credit scoring systems and whilst in theory the above are available it could still be difficult for many.

This is where you may find some of the smaller regional building societies more amenable.

Saffron will consider CCJs and defaults up to £1,000, Dudley Building Society will consider applicants with CCJs and defaults up to £2,500 and someone with an IVA satisfied more than three years ago. Buckingham Building Society will also consider applicants with an impaired credit history.

And you may think that to obtain some of these mortgages you need a large deposit and for some you will but the likes of Accord and Skipton may consider up to 85% or even 90% loan to values respectively.

And while these lenders show that the attitude towards borrowers with impaired credit is becoming more relaxed the arrival of Magellan Homeloans has changed the current landscape.

As long as there have been no problems in the previous 12 months they will accept applicants with a number of CCJs, defaults and even bankruptcies or IVAs.

This is excellent news however you will pay some of the highest interest rates in the market at LIBOR, the London Interbank Offered rate, plus 8%, resulting in a current pay rate of 8.55%.

That got me thinking: 8.55% is an extremely high interest rate for those that may have experienced credit problems in the past but have since got their house in order.

Many people experience these problems for a host of differing reasons, illness, redundancy and divorce just to name a few but they should not feel that a lender such as Magellan Homeloans is the only viable solution, it just takes some shopping around.

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